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Trucking company among victims of Enron collapse

By KRIS HUNDLEY, Times Staff Writer
© St. Petersburg Times
published February 10, 2002

Cornhusker Motor Lines in Omaha, Neb., would like to forget the word Enron.

The trucking company signed a deal to put trucks and trailers in Houston to run 16 loads of goods each day for Enron's new freight brokerage business. It was one of Enron's many ambitious plans to expand well beyond its core energy business.

Enron barged into the highly competitive trucking industry with a novel approach. Instead of arranging long hauls load by load, Enron wanted to put a truck line under contract, paying the carrier a preset amount regardless of how many loads it carried.

Tom Trout, whose family-owned Cornhusker has been in business for more than 30 years, finally agreed to Enron's terms.

"It wasn't a huge moneymaker, but it was good volume," said Trout, who said it was the company's first attempt to run lines outside its hometown. "The attraction was Enron's guaranteed freight."

But in its eagerness to stake a claim of the freight business, Enron contracted with the trucks before it got the products to fill them. Trout, who got paid under the Enron contract regardless of how few trips were made, started collecting checks for empty trucks that never moved a mile.

Enron was so desperate for customers, it took the lunacy one step further: It billed the people with freight less than it paid the carrier.

"Ultimately, Enron may have been able to figure this out, but it would have taken a long time," Trout said. "As it was, this thing was a loser."

Three weeks after Cornhusker signed the contract, Enron filed for bankruptcy. Trout had no choice but to lay off the Houston drivers and try to turn back the rigs he had leased. He figures total loss from the Enron deal will be about $300,000.

"It was a huge hit at a time when trucking can't take it," said Trout, who had to trim salaries to stay afloat. "It was horrible."

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