Celadon Group’s (OTC: CGIP) shutdown comes after cross-border shipping had already lost several other full truckload (TL) carriers this year that provided Mexico service.
Matt Silver, founder and CEO of Chicago-based Forager, said Celadon’s closure will affect freight capacity in both the U.S. and Mexico.
“Celadon is one of the largest cross-border providers in North America, so when you have a shutdown of that scale, everyone on both sides of the border is going to feel it,” Silver said. “Celadon’s shutdown is starting a major chain reaction in freight, one we’ve just begun to feel. This is the calm before the storm. Right now, it’s drivers and employees who are suffering. Soon that will trickle down to shippers, then to the public at large.”
Celadon, which declared bankruptcy Dec. 9, was one of the largest north-south TL carriers, with a fleet of around 2,700 trucks. The company was a dominant carrier on the Interstate 35 corridor, running freight from Laredo, Texas, to the Midwest, with a large concentration in the automotive sector.
Covenant Transportation Group Inc. and U.S. Xpress Enterprises also exited the U.S.-Mexico cross-border market this year.
Troy Ryley, president of Redwood Mexico at Redwood Logistics, a third-party logistics (3PL) provider based in Chicago, said Celadon’s closing could provide opportunities for another major carrier.
With more than 2,300 trucks, CFI is now the largest remaining TL cross-border operation, followed by P.A.M. Transportation Services with 1,557 trucks. Schneider National and Werner Enterprises are other TL carriers with cross-border operations, and Landstar System and Charger Logistics also have meaningful cross-border TL exposure.
“In Laredo, I feel like there is an opportunity for another big carrier to step up,” Ryley said. “Celadon’s closure is going to lead to a vacuum for a couple of months, like when Covenant and other companies pulled out of Mexico.”
Ryley added that Celadon’s closing could give 3PL providers specializing in cross-border freight a chance for growth.
“Usually, when a customer works with just one carrier, they are at the mercy of that carrier,” Ryley said. “Working with brokers can provide shippers with options; you are not tied to one carrier.”
Jesus Alvarez, head of carrier sales for digital freight marketplace Fr8Hub, agreed that clients might want to consider new strategies — long-term strategies — when planning for cross-border shipments.
“Celadon’s competitors — P.A.M., Schneider, Landstar — those kinds of big guys are probably going to absorb a lot of that volume as well. But then it goes back to if you’re relying on giving all this volume to this one carrier, or are you looking for history to repeat itself?” Alvarez said. “Why not, you know, open up a bit more — working with brokers, working with carriers. Investing in it long term as opposed to, you know, just trying to send a quick fix.”
Celadon has closed all of its divisions, including its cross-border carriers Hyndman Transport in Canada and Jaguar Transportation in Mexico.
Some key commodities that cross the U.S.-Mexico border by truck include fresh produce, cars and automotive parts, home appliances, personal computers, oil and gas pipeline steel, beverages, sugar, and livestock.
Silver said Forager is “already getting dozens of calls from customers asking us to re-power stranded loads, and that number just keeps growing.”
“Luckily Forager has a very diverse network, so our capacity is as strong as ever. We’re ready to pick up the cross-border slack,” Silver said.
Marc Vickers, CEO of Borderless Coverage, also believes Celadon’s closing “will tighten up cross-border capacity in the near term.”
Borderless coverage provides Mexican cargo insurance for brokers, shippers, customs brokers and carriers.
“It will also force shippers to open up lanes to new carriers/brokers which have been contracted with Celadon for decades,” Vickers said.
Even before Celadon declared bankruptcy, the freight market has been soft and “slow all around,” said Ernesto Gaytan Jr., general manager of Laredo-based carrier Super Transport International.
“I have been speaking to many carriers about this slowdown, and it seems that mostly everyone agrees,” Gaytan said. “The driver shortage is still there — I’m sure carriers in the rest of the nation will be adding drivers from [Celadon’s] fleet.”
Celadon’s facility was located on the same road next door to Super Transport International in Laredo. Gaytan said he has not decided if his company will purchase any of Celadon’s equipment.
“At this moment, I don’t think we will be purchasing anything from Celadon. Maybe once this slowdown is over, it would be something we would consider,” Gaytan said.
Fr8Hub’s Alvarez also said they have reached out to employees at Jaguar. Fr8Hub has sales openings in the Bajio region of Mexico.
“We have reached out, let them know we have sales openings. We are always looking for talented, driven people,” Alvarez said.