A 40-year-old California trucking company is shuttering as soaring insurance premiums and tumbling rates slam the industry - and 132 truck drivers will lose their jobs
- Rodgers Trucking, which employs around 130 truck drivers in Northern California, is shuttering after 40 years in operation.
- The company said in a notice filed with the state of California that it will permanently close by April 30.
- A company representative declined to comment.
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After a 2019 that truck drivers described as a "bloodbath," challenging conditions are slamming the trucking industry yet again.
Rodgers Trucking said in a notice filed with the state of California that it will shutter by April 30, after 40 years in operation. Some 135 employees will lose their jobs as a result of the closure. The company employs 132 truck drivers and moves intermodal, chemicals, beverages and other general freight, according to filings with the Department of Transportation.
A company representative declined to comment on the closure.
America's $800 billion trucking industry saw an unusual uptick of bankruptcies last year. In the first half of 2019, around 640 trucking companies went bankrupt, according to industry data from Broughton Capital LLC. That's more than triple the amount of bankruptcies from the same period last year - 175.
2020 may bring more bankruptcies than 2019, analysts predict
But analysts are expecting 2020 to bring a slew of closures, too. Cowen's freight transportation team wrote in a February 13 note to investors that small truckload companies in particular are seeing headwinds from soaring truck insurance premiums, low per-mile rates, and hiring challenges.
Rates in the spot market - in which trucking jobs are picked up on demand, rather than through a pre-arranged contract - are still slipping this year. January 2020 van spot rates were 4.4% lower than they were the previous January, according to DAT loadboard data. There still appears to be an overcapacity of trucks; DAT said the ratio of loads to truck was up nearly 20% year-over-year in January.
Small carriers are seeing insurance renewal rates as high as three times up from typical rates, according to Cowen's freight note.
The rise in insurance rates come from an upswing in massive personal-injury lawsuits. Trucking companies across the board have been slapped with so-called "nuclear verdicts" - sometimes resulting in companies have to pay out tens of millions of dollars after a jury finds a truck driver guilty in a wrongful death suit.
Several truckers that shuttered in 2019 often pointed to the increase of insurance rates. Texas-based Fleetwood Transportation cited insurance costs after it closed in December after 63 years in business, FreightWaves reported. Some 240 truckers lost their jobs from the shuttering.
"We had more carriers losing their authority in the fourth quarter than any other quarter (on record)," Avery Vise, the vice president of trucking at FTR, previously told Business Insider. "There's no reason to think that's going to stop on a dime."
Cowen's team agrees. "Bankruptcies were up significantly in 2019, a trend that appears to be continuing - if not accelerating - thus far this year," the freight note said.
These headwinds are afflicting truck manufacturers like Volvo, Paccar, Daimler and others. Truck production in 2018 and 2019 reached highs not seen since 2005 and 2006.
But a sharp downturn is expected in 2020. According to commercial vehicle intelligence firm ACT Research's preliminary numbers, North American truck production in 2020 will drop by 34-35%. Sales will fall by less than 30% over 2019, ACT said.
Read more about the trucking recession:
A truckload giant just filed for bankruptcy, and it leaves nearly 3,000 truck drivers jobless
'I don't know how long I can stay in business': Truckers' fears have soared to recession-level highs