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Bankruptcy filing ties up deliveries
By KRIS HUNDLEY and LOUIS HAU Cliff Deslippe, proud new owner of Suncoast Vending in Spring Hill, headed to the Tampa office of Consolidated Freightways Corp. on Tuesday morning, eager to pick up six soda and snack machines shipped by a manufacturer in New York. When he got there, he discovered what the trucking company's 15,500 employees learned by voice mail on Monday: He was out of luck. The Vancouver, Wash., company filed for Chapter 11 bankruptcy protection and locked the doors at all its locations nationwide. At its east Tampa terminal, a couple of security guards turned Deslippe and several angry employees away from the padlocked office. Several dozen trailers emblazoned with the familiar red-and-green "CF" logo sat parked on the grounds of the terminal at E 26th Avenue and 40th Street. "Those machines cost more than $10,000 and I've already spent about $200 on product that's sitting in my garage," said Deslippe, who was told late Tuesday that he may be able to retrieve his machines this morning. "Now I'm going to have to rent a truck for a second day. It's just more money out the window." Deslippe's disgust was echoed by Ken Wood, president of Teamsters Union Local 79, which had 59 Consolidated Freightways members. "You have people who have been with them for 25, 26 years," said Wood, who said average hourly wage for drivers was about $19.75 plus benefits. "They got the call saying don't report to work, it's over with." Jack Williams of Bushnell was one of those drivers who got the call during his Labor Day dinner. He has been with Consolidated Freightways for 18 years and with the Teamsters for 21. Though the trucking industry has been facing a shortage of experienced drivers, Williams, 48, said there are only three unionized carriers in the area. "I'd like to be able to continue with my pension, because with the Teamsters it's 25 years and out," Williams said. "But it looks like I'm coming up short. It's just very hard to take." The closing also caught 13-year driver Kenny Widdon off guard. The 53-year-old Wesley Chapel resident said he knew the company was grappling with financial problems, but he and his colleagues assumed it would hang on until April, when the drivers' current contract expires. "This has nothing to do with us," Widdon said. "This was the most mismanaged company since ... It's sad." Despite his bitterness at being out of work, Widdon said Consolidated Freightways was a good employer. "They were fair and there was a lot of pride," he said. "They've been in business for 73 years. It was a good thing." Nationally, the collapse of Consolidated Freightways gives other trucking companies an opportunity to gain market share at a time of soft demand. The stock prices of several large carriers made double-digit percentage gains as investors bet they would pick up much of the business left behind. "This is a sea change for our industry," said Bill Zollars, chief executive of Yellow Corp. of Overland Park, Kan. Yellow is among the bigger players vying for business once belonging to Consolidated, which had $2-billion in revenue in 2001 and controlled about 15 percent of the domestic long-haul market. "We've gotten hundreds of phone calls today from companies that would like us to be their provider and I'm sure that's going on all over the industry," said Zollars. Consolidated's clientele included Home Depot, the U.S. Postal Service and General Electric, and analysts said these companies are likely to face some delivery snags over the next two or three days. Because Consolidated's financial troubles were well-known in the industry, many companies had already been making contingency plans and analysts emphasized that disruptions would be limited. Consolidated, which had been losing money for more than two years, announced plans Monday to file for Chapter 11 bankruptcy and liquidate assets, resulting in 15,500 lost jobs. The company's demise is expected to bring huge benefits to Arkansas Best, Roadway, Yellow and other leaders in the "less-than-truckload" sector. Less-than-truckload carriers fill trailers with freight from multiple customers and move it around the country through a hub-and-spoke system. Truckload carriers dedicate entire trailers to one customer and haul their goods from point to point. On the Nasdaq Stock Market on Tuesday, shares of Arkansas Best soared $5.09, or 25 percent, to $25.67. Shares of Roadway shot up $3.64, or 15 percent, to $27.24 and Yellow's stock price climbed $2.77, 12 percent, to $25.06. Analysts said these and other less-than-truckload companies will now be able to divvy up 2.3-million tons of freight and raise their rates. Thomas Albrecht, a trucking analyst at BB&T Capital Markets in Richmond, Va., said the survivors' yields could improve by about 5 percent for the next two to three years and possibly usher in "a new golden era" for the troubled sector. Thousands of small and mid-sized truckload carriers went out of business over the past two years because of the economic downturn, taking hundreds of thousands of trailers off the road. That gave a boost to industry leaders such as J.B. Hunt Transport Services Inc. and Knight Transportation Inc., which have grown and even raised rates despite weak demand. Now it is the less-than-truckload companies' turn. Freight tonnage grew 3.5 percent during the second quarter, and the American Trucking Associations predicts "sluggish growth" for the remainder of the year. But analysts now say even modest growth will be multiplied thanks to the significant decline in capacity in the less-than-truckload sector. Too much supply and not enough demand has been the industry's basic problem. James Valentine, trucking analyst at Morgan Stanley in Chicago, said truckload carriers will see little, if any, benefit as a result of Consolidated's bankruptcy, which he called the largest in U.S. history among trucking companies. But thousands of regional carriers, which haul freight over shorter distances, stand to prosper from the disappearance of Consolidated, said Harvey Donaldson, director of the Logistics Institute at Georgia Tech University. "We're right in the middle to end of the Christmas rush as far as retail shipments are concerned," Donaldson said. "But there is sufficient capacity to absorb Consolidated's business." Roadway, which has suffered from many of the same economic conditions that led to Consolidated's closing, believes the timing is right to turn its business around. "We have a lot of mutual customers," said James Staley, president of Roadway of Akron, Ohio. "Hopefully, some of that business will shift to us." -- Information from Times wires was used in this report.
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From the Times Business report Robert Trigaux
From the AP
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