Insurance rate spikes, regulations, low profits take toll on US trucking
A SURGE in insurance rates has forced Alabama-based flatbed carrier, Carney Trucking Company, to close
A SURGE in insurance rates has forced Alabama-based flatbed carrier, Carney Trucking Company, to close. It was founded in 1983 and employed 25 drivers to operate a fleet of 28 registered vehicles that covered 2.1 million miles in 2017.
'We had a major accident last year,' owner David Carney told New York's FreightWaves. 'Once we got the insurance quote, we tried to make it work, but we just couldn't.'
According to the US Federal Motor Carrier Safety Administration's (FMCSA) SAFER Web website, the fleet had a fatal crash in the past 24 months and three additional US Department of Transportation reportable crashes in the past two years. In the past 24 months, its vehicles had been inspected 70 times with a 31.4 per cent out-of-service rate versus a national average of 20.72 per cent.
Trucking shutdowns have spiked this year, and insurance is just one force at play. Indiana-based ALA Trucking shut its doors in early June and company owner Alan Adams blamed the FMCSA's scoring system for fleets, sparking a surge in insurance premiums.
'I didn't do anything wrong with the company. It's the way the government has this new grading system that is affecting a lot of companies,' said Mr Adams. 'If there's a situation on the road where a car comes off the on-ramp and bumps into a tractor trailer, until that claim is settled, the insurance company charges a company with that claim.'
Mr Adams said insurance for his 41-driver company rose from $340,000 to $700,000 in one year.
Other companies have cited low freight rates, insufficient of freight volumes and other reasons for their shutdown. Schneider National has just announced it was shutting down its First to Final Mile business owing to a lack of profitability. That closure cost 800 drivers their jobs.
Also on July 30, Terrill Transportation in California ceased operations. That fleet had 30 trucks and 36 company drivers as well as 12 owner-operators.
In addition to Schneider, three of the largest closures so far this year have been New England Motor Freight, Falcon and LME.
LME was a 400-truck less-than-truckload (LTL) carrier based in Minnesota. Falcon's shutdown was tied to alleged mismanagement, while New England Motor Freight's shutdown in February shook the northeast LTL market. With roots going back 100 years, the nation's 19th-largest LTL carrier with 1,300 drivers had struggled financially for some time.
The company closed in February, after two years of losses and the combination of high labour costs and a 'severe' driver shortage made it unsustainable to stay in business.