By Jennifer Smith
New England Motor Freight Inc., a major player in the competitive New York regional trucking market, sought bankruptcy protection Monday and intends to wind down operations.
The trucking company owes tens of millions of dollars to creditors including banks, a union pension fund and fuel distributors.
The bankruptcy filing follows what many consider the best year for trucking companies in recent history, as strong freight volumes and tight capacity drove up the prices shippers pay for truck transportation.
It is the largest trucking bankruptcy since 2002, when Consolidated Freightways Corp. abruptly shut down, according to Satish Jindel, president of industry research group SJ Consulting Group Inc. That filing triggered disarray across supply chains and left shippers' freight stranded at terminals amid questions of payment and ownership.
New England Motor Freight and 10 related affiliates filed for chapter 11 protection in U.S. Bankruptcy Court in Newark, N.J., with assets of $100 million to $500 million and debts between $50 million to $100 million. The company listed four banks -- JPMorgan Chase & Co., TD Bank, East West Bank and Santander Bank -- as its four largest unsecured creditors. It owes those bank more than $59 million, according to court papers.
New England Motor Freight's longtime chairman, Myron P. Shevell, is the father-in-law of musician Paul McCartney, and his daughter, Nancy Shevell, has held various roles in the company, including vice president.
The company is the 19th-largest U.S. carrier in the less-than-truckload sector, with revenue of $402 million in 2017, according to SJ Consulting Group. Less-than-truckload operators combine orders from multiple customers on each truck.
A bankruptcy lawyer for New England Motor Freight couldn't be immediately reached for comment.
"We have worked hard to explore options for New England Motor Freight, but the macro-economic factors confronting this industry are significant, " Vincent Colistra, a senior managing director with Phoenix Management Services Inc. and the trucking company's chief restructuring officer, said in a statement posted to its website.
A record low number of trucking companies went out of business in 2018 because most were able to raise prices, said Donald Broughton, principal at Broughton Capital LLC. "Demand for services continues to be strong," he said. "What usually kills trucking companies is when demand is dropping or they're unable to raise rates or fuel rates are skyrocketing."
The filing will leave some shippers scrambling to line up transportation as trucking capacity remains constrained. "Shippers are going to feel the pain in service and rates," Mr. Jindel said.
The biggest stand-alone LTL carrier in the U.S., Old Dominion Freight Line Inc., of Thomasville, N.C., recently reported a $605.7 million net profit for 2018, with revenue that grew more than 20% to about $4 billion.
Patrick Fitzgerald contributed to this article.
Write to Jennifer Smith at email@example.com
(END) Dow Jones Newswires
February 11, 2019 18:57 ET (23:57 GMT)
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