New England Motor Freight is shutting its doors after announcing Chapter 11 bankruptcy last week. The company has been in business since 1918, growing to be the 19th largest LTL carrier with revenues of $402 million in 2017, over 10,000 pieces of equipment, 40 terminals and 1,300 drivers. (1)
Last month, NEMF sent a letter to its customers announcing rate increases effective earlier this month, listing reasons such as “regulatory mandates, insurance premiums, new equipment and technology advancements.” (2)
On Monday, Vincent Colistra, Chief Restructuring Officer stated, “Following two years of losses, and with continuing and unsustainable rises in overhead as well as a severe shortage of drivers, we have concluded that the company has no choice but to proceed with an orderly wind down of operations.” (2)
The company, which declared that it was tens of millions of dollars in debt, did so without warning, prompting the pursuit of an employee class action lawsuit for violations of wage laws which included failure to pay full wages and notifying employees of the shutdown. (3)
What You Can Expect:
There is no doubt that shippers and brokers who once utilized NEMF will experience changes due to the fall out, one of which are rate increases. As Tommy Barnes, project44’s president of information technology explained, “A lot of bad freight is going to get re-priced.” (1) LTL shippers can expect see a significant pricing increase which can range from 3-5%, according to Ryan Roynter, vice president of carrier relations and pricing at GlobalTranz, who believes that while carriers continue to service their regular customers, those scrambling to recover freight once hauled by NEMF are likely to be paying a premium for the service. (2)
Additionally, those shipping LTL can experience longer pick up and delivery windows as capacity tightens. (4)
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