Exclusive: closure of Central Freight Lines after 96 years
2,100 employees will be laid off just before Christmas. Central Freight Lines is the largest trucking company to close since Celadon ceased operations in 2019.
Waco, Texas-based Central Freight Lines has informed drivers, employees and customers that the less-heavy-duty carrier plans to go out of business on Monday after 96 years, the company’s president told FreightWaves on Saturday.
“It’s just awful,” said CFL President Bruce Kalem.
A source close to CFL told FreightWaves that CFL had “too much debt and too many unpaid bills” to continue to operate, despite exploring all available options to keep its doors open.
“Years of business interruption and struggles for many years sapped our cash flow and we had no other place to go at this point,” Kalem told FreightWaves. “Nobody is going to make any money on this shutdown, nobody.”
Central Freight will stop picking up new shipments as of Monday and plans to deliver almost all cargo in its system by December 20, according to a company statement.
A source close to the company said it was unsure whether CFL would file Chapter 7 or “liquidate out of bankruptcy,” but carrier LTL has no plans to reorganize.
The company reshuffled its management team nearly a year ago in an effort to stay afloat, including adding company owner Jerry Moyes to the role of Interim President and CEO of CFL. Moyes remained CEO after Kalem was promoted to president in July.
“I think it was surprising that there was no buyer for the whole company, but buyers were interested in some parts but not the whole,” said the source, who didn’t want to be identified, at FreightWaves. “This could have been in part because the network was so large that there was too much overlap with some buyers that they didn’t need locations or employees in places where they already had solid operations. “
Third-party logistics provider GlobalTranz has informed its customers that it has removed CFLs as a “CSP coverage and carrier option immediately, to prevent rebooking,” multiple sources told FreightWaves on Saturday.
CFL, which has more than 2,100 employees, including 1,325 drivers and 1,600 powertrains, is in talks with “key customers and suppliers and expects sufficient liquidity to complete deliveries over the next week so orderly, ”a CFL spokesperson said. Approximately 820 employees are based at the company’s headquarters in Waco.
Despite diligent efforts, CFL “has been unable to secure commitments to fund ongoing operations, find a buyer for the entire company, or fund a Chapter 11 reorganization,” an employee told FreightWaves. another source close to the company.
Kalem said the company had 65 terminals before its decision to shut down.
FreightWaves received a report from a source nearly two weeks ago that CFL was not renewing its east coast terminal leases, but was unable to confirm the information with CFL executives.
Another source told FreightWaves that some of the carrier’s West Coast terminals LTL had been sold recently, but no reason had been given for the transactions.
At the time, Kalem said the company was “working to find alternatives” and could not speak due to nondisclosure agreements. He said CFL executives, including Moyes, were trying to do everything to “save the business”.
“Jerry [Moyes] injected a lot of money into the business, but it just wasn’t enough, ”Kalem said.
Kalem said he was aware that a major carrier wanted to hire many CFL drivers, but was unable to name names at this time.
“Central Freight is in negotiations to sell a substantial portion of its equipment,” the company said in a statement. “In addition, Central Freight coordinates with other regional LTL carriers to provide its employees with the opportunity to apply for other LTL jobs in their area.
Late on Saturday night, Kalem said fuel cards were working and drivers would be paid for the cargo they carried for the LTL carrier until all cargo was delivered by the target date of December 20.
“I’m going to work feverishly with the time I have left to get these good jobs – I owe them,” Kalem told FreightWaves. “We’re going to pay our drivers – that’s why we had to shut it down like we are doing now. We’re going to deliver all the cargo that’s in our system by next week, and we think we can do it. “
At the start of the pandemic, Central Freight Lines was one of four trucking-related companies that received the maximum reward of $ 10 million through the Small Business Administration’s Paycheck Protection Program (PPP). United States. This happened at a time when drivers and CFL employees were forced to undergo pay cuts, a move that was not welcomed by the drivers.
“It all went to the payroll,” Kalem said of PPP funds. “Yes, our employees and our drivers have suffered a pay cut over the past few years, and we’ve returned most of it, we’ve even increased their pay over the past few months, but it just wasn’t enough. to attract drivers. “
FreightWaves staff members Todd Maiden, Timothy Dooner and JP Hampstead contributed to this report.
Craig Fuller, CEO and Founder of FreightWaves, reacts to the news from Central Freight Lines:
“With Central struggling for many years and unable to achieve profitability, it makes sense that they would want to liquidate as equipment and real estate hit record prices.”
Central Freight Lines Declaration
Here is the statement Central Freight Lines gave to FreightWaves on Saturday night after reports surfaced of its impending closure:
“We make this announcement with a heavy heart and extreme regret that the Company cannot continue after nearly 100 years of activity. We would like to thank our exceptional employees for their perseverance and for professionally completing the liquidation while supporting each other. In addition, we thank our customers, suppliers, equipment suppliers and other stakeholders for their loyalty and support.
“The company has explored all the options available to continue operations. However, operating losses have sapped all remaining sources of liquidity, and the Company’s liabilities far exceed its assets, all of which are subject to liens in favor of multiple creditors. Despite diligent efforts, the company was unable to obtain commitments to finance ongoing operations, find a buyer for the entire company, or finance a Chapter 11 reorganization. Given its remaining resources limited, the Company concluded that the best alternative was a safe and orderly liquidation. As we complete the liquidation process, our primary objective will be to provide the smoothest possible transition for all stakeholders while maximizing the amount available to apply to the Company’s obligations.
“Central Freight is in negotiations to sell a substantial part of its equipment. In addition, Central Freight coordinates with other regional LTL carriers to provide its employees with the opportunity to apply for other LTL jobs in their area. Discussions are ongoing and no asset purchases or job offers are guaranteed.
Brief history of Central Freight Lines
|1925||Founded in Waco, Texas, by Woody Callan Sr.|
|1927||Establishes regular routes in Texas between Dallas, Fort Worth and Austin.|
|1938||The Dallas facility opens as the world’s largest freight facility.|
|1991||Receives interstate operating authorization from 48 states, extends to Oklahoma.|
|1993||Joins Roadway Regional Group and begins service in Louisiana.|
|1994||Grows in Colorado, Kansas, Missouri, Illinois and Mississippi.|
|1995||Consolidation of Central, Coles, Spartan and Viking Freight Systems into Viking Freight, Inc. is announced. Central Waco’s head office begins to close.|
|1996||Becomes the southwest division of Viking Freight, Inc.|
|1997||An investment group led by central senior management purchases the assets of the former CFL from Viking Freight and reopens as new Central Freight Lines.|
|1999||Extends to California and Nevada.|
|2009||CFL Network serves Idaho, Utah, Minnesota and Wisconsin.|
|2013||Acquisition of Circle Delivery of Tennessee.|
|2014||Acquisition of DTI, an LTL transporter from Georgia.|
|2017||acquires Wilson; new division created with an increase of 80 terminals.|
|2020||GlobalTranz Carrier of the Year winner.
acquires Volunteer Express, Inc. of Dresden, Tennessee