Consolidated Freightways closes doors, 20 out of work

In an ironic turn of events, Consolidated Freightways Corporation announced on Labor Day that it would file for bankruptcy and eliminate more than 15,000 jobs around the country.

The 73-year-old North American trucking company, based in Vancouver, Wash., filed Chapter 11 bankruptcy and shut down operations Sept. 3, leaving 20 employees jobless at CFC's Springfield terminal. While it's a small number, the announcement hit hard with Rod Gilbert, manager of the terminal at 2930 E. Kearney St.

"We have ceased operations effective Monday (Labor Day)," Gilbert said. "I'll do everything I can to help them find good jobs because this is the finest bunch of people I ever worked with. I, too, have plans to look for a job."

Gilbert said his 13 drivers were members of Teamsters Local 245.

The announcement of a less-than-truckload carrier filing bankruptcy comes as no surprise to Prime Inc. spokesperson John Hancock. But there is a lesson to be learned, he said, seeing one so large and with such a long history succumb to the industry's troubles.

"In business, size and longevity are not guarantees of success," Hancock said. "Nobody is above having to run a good business."

Less-than-truckload carriers haul cargo for multiple businesses on the same load. Truckload carriers haul a single company's shipment per truck.

APT Transport Inc. General Manager Craig Gracey sees it as an opportunity to acquire some of CFC's shipping business.

"It opens some opportunity for us," Gracey said. "They were in the door to a bunch of places we weren't able to get in. Now we'll have a chance to get some of that business."

APT is a less-than-truckload carrier with around 100 employees and headquarters in Springfield. It serves 48 states.

Tough times

In recent years, trucking has been a tough business for both the less-than-truckload carriers, like CFC and APT, and the truckload carriers, like Prime. Forces such as increased insurance premiums, higher fuel costs and a downturn in the economy have led to struggling transportation companies.

Hancock said less-than-truckload carriers are typically seeing only a 1 percent or 2 percent profit margin.

"(Prime is) at 10 percent and think we're dying," he said. "I've been looking at these less-than-truckload (carriers) for the last few years and seriously wondering how they make it."

For instance, United Parcel Service, the nation's largest less-than truckload transportation company, did $30 billion in business last year and netted $2.4 billion, according to Commercial Carrier Journal, an industry publication.

Others in the less-than-truckload industry also had low profit margins last year: Yellow Freight did $3.2 billion and made $15 million; and Roadway Express did $2.7 billion and made $30 million.

CFC had revenues of $2.2 billion and lost $104 million.

Consolidated Freightways reported second-quarter 2002 revenues of $482.4 million and a net loss of $123.2 million. A company news release said CFC's board of directors determined the company couldn't continue at that pace without additional financing, which it could not obtain.

Last month, a surety bond that secured the company's workers' compensation and vehicular casualty insurance was cancelled, leading the company to believe that additional bonds also would be cancelled, a company release stated.

"I don't think there is anything crooked going on," Gilbert said. "It was just bad management. We weren't lean and trim enough."

CFC had been struggling for the last couple of years, but appeared to be rebounding under new Chief Executive Officer John Brincko.

Brincko, who managed turnarounds for Sun World International Inc., Barney's New York, Mossimo Inc., Globe Security and Stroud's, was hired May 28.

Positive signs for the company earlier this year included new or re-signed contracts with the U.S. Postal Service, Genlyte Thomas, Mail-Well Inc., Home Depot, Pliant Corp. and Siemens Corp.

Gilbert noticed a difference. "We'd been struggling for a long time, but lately it's picked up a whole lot," he said. "It was just too late."

CFC subsidiaries CF AirFreight, Canadian Freightways Ltd. and Grupo Consolidated Freightways will continue to operate as usual.