Jump to content
Sign in to follow this  
70mackMB

NEMF files voluntary chapter 11 petition

Recommended Posts

More info at -nemf.com- under "News and Awards"   .....Hippy

Share this post


Link to post
Share on other sites

Shevell Group is shuttering 10 freight companies, that stinks.

Share this post


Link to post
Share on other sites

Thx Hippy.  Can't understand how this is happening in this economy.  You look at their equipment on road-looks good-well maintained and current.  Scrolled through their web site-very professional.  And to me, Chapter 11 is the route taken to catch your breath and reorganize.  This sounds like final objective is a complete shutdown.

I'm sure we will hear more.

Share this post


Link to post
Share on other sites

New England Motor Freight Files for Bankruptcy

Heavy Duty Trucking (HDT)  /  February 11, 2019

LTL carrier New England Motor Freight and its subsidiaries have voluntarily filed for Chapter 11 bankruptcy in New Jersey, intending to facilitate an orderly wind down of its operations.

The Elizabeth, New Jersey-based company had fallen on hard times, recording losses in consecutive years as well as “unsustainable rises in overhead,” according to Vincent Colistra, a senior managing director for Phoenix Management Services and chief restructuring officer for the company. Colistra also placed blame on a severe shortage of available drivers in the trucking industry.

Just a week prior to filing, NEMF had implemented a 5.4% general rate increase saying that it was faced with increased costs associated with regulatory mandates, insurance premiums, new equipment and technology advancements.

As a result, the company determined that Chapter 11 would be the best way to maximize the value of its assets for the benefit of its employees and various creditor constituencies.

“We have worked hard to explore options for New England Motor Freight, but the macro-economic factors confronting this industry are significant,” said Colistra. “We have concluded that the Company has no choice but to proceed with an orderly wind-down of operations in a Chapter 11 proceeding.”

.

Photo 2.jpg

Share this post


Link to post
Share on other sites

NEMF and 10 related subsidiaries declare bankruptcy

John Schulz, Logistics Management  /  February 11, 2019

It is another sad day in the trucking industry as another storied, unionized, less-than-truckload (LTL) carrier has gone under and taking tons of capacity away from shippers in the Northeast. 

In a financial development that shocked the trucking industry, 101-year-old New England Motor Freight and 10 related subsidiaries (including truckload giant Eastern Freightways) voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of New Jersey in Newark on February 11.

Privately held NEMF, which competes mostly in the high-cost Northeast region, ranked last year as the 17th-largest LTL carrier in the country with revenue of just over $400 million. As a private company, NEMF did not release profit or loss numbers.

NEMF said it “intends to use these proceedings to facilitate an orderly wind-down of its operations.” NEMF was a unionized carrier, mostly covered by the International Association of Machinists and Aerospace Workers, whereas nearly all the other LTL unionized bankruptcies involved Teamsters-related companies.

NEMF’s cessation underscored the brutal nature of the thin-margin trucking industry. NEMF’s exit leaves only a handful of Northeast regional LTL carriers with significant capacity – YRC unit New Penn, Pitt Ohio, A. Duie Pyle and Ward Trucking, among them.

In an interview with LM last month, Myron P. Mike Shevell, chairman of the Shevell Group, hinted at changes when he described his freight demand as “very light right now.” But that is somewhat a normal condition for January in trucking.

“The LTL market is changing dramatically with computerization and different shippers changing modes,” the 83-year-old Shevell said. “There’s more shippers going to warehousing and shipping direct via crossdock or from the manufacturing point. That’s all changing.”

In that interview, Shevell warned, “Nobody can afford the cost of equipment sitting idle and people taking advantage of that. There’s a lot of hiccups. There are a lot of problems. There’s going to be a point where you’ll just have to wait and see.”

Vincent Colistra, senior managing director with Phoenix Management Services, and chief restructuring officer said in a statement, “We have worked hard to explore options for New England Motor Freight, but the macro-economic factors confronting this industry are significant.”

Phoenix is serving as NEMF’s restructuring advisor through Vincent Colistra as the CRO. Colistra declined comment when contacted by LM.

NEMF said after two years of losses, and with “continuing and unsustainable rises in overhead” as well as a severe industry shortage of drivers, it concluded that NEMF “has no choice but to proceed with an orderly wind-down of operations” in a Chapter 11 proceeding.

Knowledgeable observers of the LTL industry said NEMF’s reliance on a few large big box retailers left it vulnerable to rate cutting in order to stay afloat.

“I am not that surprised,” Satish Jindel, principal of SJ Consulting, which closely tracks the LTL sector, told LM. He called it a “sad day” in the trucking industry as one of the industry’s grand old names was calling it quits.

“Mike Shevell built this company from the ground up,” Jindel said of NEMF’s chairman. “My heart goes out to him.”

Jindel said he didn’t think NEMF’s financial difficulties were that serious but “apparently they were,” Jindel added. Jindel took polite issue with NEMF citing “macroeconomic factors” in the LTL industry as reason for its demise.

“While they state the macroeconomic factors are significant, I believe they are not being open with what caused this problem,” Jindel said. “It is not the macroeconomic problem in the industry.”

Jindel, whose company compiles the annual Top 50 trucking lists for LM, disclosed that this year’s listing will show nearly all the top carriers have posted year over year revenue increases of 10% to 12%.

“If you got that revenue, and didn’t just your cost your freight properly, shame on you,” Jindel explained.

Privately, industry insiders said the challenge NEMF faced is what happens when it became too reliant on one or two large retail customers and must accept rate decreases in order to keep its trucks filled.

“If you let one customer get too big and that customer dictates what you have to do, that’s bad,” one industry source said. “It’s a Catch-22. You can’t say no, but if you say yes, you find yourself digging a hole.”

NEMF said only “upon the recommendation of its advisors,” it determined that a Chapter 11 proceeding was the “best mechanism to maximize the value of its assets for the benefit of its employees” and various creditor constituencies.

Besides Shevell and other NEMF employees, the biggest losers are going to be the shippers in the Northeast. They face an ever-dwindling supply of reliable, large LTL carriers. And with NEMF out of the picture, Jindel said those Northeast shippers can expect double-digit rate increases as capacity tightens.

Overall, the Shevell Group companies ranked as the 70th-largest trucking conglomerate in the country. Its units ran more than 1,550 company trucks and nearly 4,000 trailers.

The timing could favor YRC Worldwide. Not only does YRC own New Penn, one of the remaining large Northeast carriers, but it has a contract coming up covering 24,000 Teamsters that expires at the end of March.

“Here’s another union company folding—that’s not good for the Teamsters,” Jindel noted.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

Welcome to BMT!

...The world's best antique, classic & modern Mack Truck support forum! Founded in 2000, BigMackTrucks.com is the place to go for everything related to Mack Trucks!

BMT!

BigMackTrucks.com is owned and operated by Watt's Truck Center, New Alexandria, PA. This forum and it's contents are not affiliated with Mack Trucks, Inc. or Volvo Trucks North America.

×