Rising Diesel and Insurance Costs Push Trucking Firms Into Bankruptcy

Rising diesel prices, insurance premiums and other operating expenses drove at least eight transportation-related companies to seek Chapter 11 bankruptcy protection in September, according to bankruptcy documents reviewed by FOX Business. The filings span several US states and highlight financial pressures on trucking and freight businesses responsible for moving goods throughout the country.

Truckload LLC owner Marcus Overcast identified fuel and insurance expenses as factors behind his company's bankruptcy filing in Florida. He told FOX Business that insurance represented the largest financial pressure on the business.

Truckload LLC filed for bankruptcy on September 9 in the US Bankruptcy Court for the Middle District of Florida. The company estimated its assets at between $100,001 and $500,000, with liabilities of less than $50,000.

Automotive expert Lauren Fix said higher diesel prices can affect businesses and consumers across the supply chain because transportation is required to move a wide range of products.

"When gas prices go up or diesel prices go up, everything that goes from point A to point B is affected," Fix said.

Higher transportation expenses can affect agricultural equipment shipments, freight moving from ports to warehouses, food distribution and package deliveries. Those additional costs can extend beyond trucking companies to other businesses involved in producing, distributing and selling goods.

Diesel prices have added to the industry's financial burden as trucking operators contend with insurance expenses and other operating costs. The Wall Street Journal reported that diesel was selling for approximately $6.26 per gallon on Thursday at a truck stop in Orange, Texas.

President Donald Trump moved this week to provide temporary relief by allowing red-dyed diesel, normally reserved for off-road use, to be used on highways. Fix estimated that the measure could substantially reduce fuel expenses for drivers.

"Huge difference," Fix said of the potential impact, estimating savings of between 50 cents and $1 per gallon.

The White House also said Trump had reached an agreement with Europe to release 100 million barrels of refined diesel and crude oil from strategic reserves over the following four months.

The September bankruptcy filings show varying levels of financial distress among transportation companies. Several reported liabilities exceeding their assets, according to the figures included in their bankruptcy records.

Globemaster Incorporated filed for bankruptcy in Illinois on September 15 under Subchapter V, reporting approximately $1.1 million in assets and $3.26 million in liabilities. CLJ Transporting Inc. filed in Florida on the same day, reporting approximately $483,205 in assets and $823,161 in liabilities on a July balance sheet.

Pacer Transport Inc. filed in Louisiana on September 4, estimating assets of less than $50,000 and liabilities between $1 million and $10 million. Texas-based Jett Transport & Materials, LLC filed on September 14, reporting estimated assets between $100,001 and $500,000 and liabilities between $500,001 and $1 million.

Mill Creek Logistics–Illinois Inc. filed in Kansas on September 14, listing approximately $885,500 in assets, including $808,000 in trucks and equipment, against roughly $1.83 million in liabilities. Arizona-based RP Hay Hauling, LLC filed on September 10, reporting approximately $1.32 million in assets and $1.53 million in liabilities.

Xoco Transport LLC filed in Texas on September 16, estimating both assets and liabilities at between $1 million and $10 million.

FOX Business said it contacted Globemaster Inc., CLJ Transporting, Pacer Transport, Jett Transport & Materials, Mill Creek Logistics–Illinois, RP Hay Hauling and Xoco Transport for comment. The report also credited FOX Business reporter Stepheny Price with contributing to the coverage.