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MarketScreener Homepage  >  Equities  >  OTC Bulletin Board - Other OTC  >  Celadon Group, Inc.    CGIPQ

CELADON GROUP, INC.

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Trucking Market Will Absorb Celadon Shutdown, Transport Experts Say

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12/10/2019 | 05:45am EST

By Jennifer Smith

Trucking markets should easily absorb the sector's biggest bankruptcy in years, freight industry experts say, as truckload carrier Celadon Group Inc. winds down operations and customers seek to recover their shipments.

The Indianapolis-based trucking company sought chapter 11 bankruptcy protection Monday and asked its drivers to deliver loads still in transit and hand over the company's trucks.

Celadon is one of the largest truckload carriers in North America, with some 3,300 trucks and 3,800 workers, including 2,500 truck drivers. It had an estimated $611 million in revenue so far this year, according to transportation research company SJ Consulting Group Inc.

Celadon's customer list included Lowe's Cos., Philip Morris International Inc., Walmart Inc., Honda Motor Co. and Procter & Gamble Co., according to its bankruptcy court filing.

The company owes $33 million to the Justice Department stemming from a federal probe into the company's accounting, and smaller amounts to creditors including TA Dispatch LLC, which bought some of the company's logistics assets earlier this year, and vendors such as Pilot Travel Centers LLC and Goodyear Tire & Rubber Co.

Although the shutdown is the biggest truckload bankruptcy in memory, Celadon's business only accounts for a sliver of the roughly $200 billion for-hire truckload market, SJ Consulting President Satish Jindel said.

"There are plenty of carriers who can fill up the demand this will create," Mr. Jindel said.

Capacity in the broader truckload market remains relatively loose this year after truckers rushed to expand their fleets during the 2018 freight boom.

"It doesn't move the needle on capacity because there are more trucks than loads in the general market," said Donald Broughton, managing partner of transportation industry data firm Broughton Capital LLC.

Such shutdowns raise concerns over drivers who may be stuck far from home and for shipping customers who may have freight shipments tied up. Some previous trucking failures by smaller companies have left drivers and cargo stranded.

Celadon driver Sam Jaime said Monday that company officials told truckers hauling loads to finish the delivery, while others were directed to the closest Celadon terminal or to the nearest truck stop. "Celadon is offering a bus ticket home," he said. "It is on us to see how to get our stuff home."

Celadon officials didn't respond to requests for comment.

Given Celadon's size, the company likely had "thousands of loads in transit, and then additional loads awaiting pickup at shippers" facilities at the time of the shutdown, said Larry Gross, president of Gross Transportation Consulting.

He said shippers might see "some very short-term dislocations while all of this gets sorted out," but Celadon "seems to be approaching it in a responsible manner."

Celadon also handles cross-border freight running between Mexico and the U.S. The shutdown could make it harder for shippers to find northbound capacity, Mr. Gross said, and potentially boost intermodal business moving freight by truck and rail across the border for operators like Kansas City Southern.

Messrs. Gross and Jindel both attributed Celadon's failure to the company's individual problems, which included an accounting scandal tied to a big bet on the company's truck-leasing business, and not to a broader slowdown this year in freight demand.

"It is more about Celadon than it is about any current apocalyptic events in the trucking freight market," Mr. Gross said. "Having said that, when the tide goes out it exposes the rocks. They came under pressure because of the supply-demand imbalance...and ran out of runway."

Write to Jennifer Smith at jennifer.smith@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CELADON GROUP, INC. 2.78% 0.0185 Delayed Quote.27.59%
LOWE'S COMPANIES, INC. 2.59% 122.36 Delayed Quote.2.17%
PHILIP MORRIS INTERNATIONAL 0.15% 88.69 Delayed Quote.4.23%
PROCTER & GAMBLE COMPANY 0.27% 126.41 Delayed Quote.1.21%
WALMART INC. -0.81% 114.96 Delayed Quote.-3.26%
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