July was a bad month with several company closures. LME (previously Lakeville Motor Express which closed in 2016) of Roseville, Minnesota, abruptly shut down thirty delivery terminals in several states without notice. While unforeseen circumstances were cited, LME had just started paying a multimillion dollar settlement to ninety union workers who were laid off when Lakeville Motor Express ceased operations, and there were unresolved lawsuits demanding millions from LME for allegedly violating pension obligations. LME listed customers that included 3M, Toro, John Deere and Osram Sylvania.

Starlite Trucking and Terrill Transportation, two California based small companies, also shut down in July. Starlite, a forty-year company with thirty employees servicing eleven Western states in agriculture hauling, cited as reasons for the shutdown that freight rates had not kept up with the rising costs of equipment upgrading and California Air Resource Board and labor regulations. Similar reasons were blamed for the Terrill closure. Terrill was a twenty-five-year company with thirty trucks, thirty drivers and twelve owner-operators

Another Alabama company, Carney Trucking founded in 1983, also closed in July, citing the costs of insurance following a major accident as reason for its shutdown. Carney was a family-owned flatbed carrier employing twenty-five drivers.

A.L.A. Trucking, Anderson, Indiana, closed down in June after forty-two years in business hauling retail and automotive freight throughout the Midwest. A.L.A., another small operation with forty-one drivers, cited high insurance costs as reason for its shutdown.

Williams Trucking, Dothan, Alabama, began flatbed carrier operations in 1994 and closed in May. Williams had twenty company trucks, fourteen owner-operators, and employed forty-eight drivers. No reason was cited for the closing, but according to the Federal Motor Carrier Safety Administration's SAFER website, Williams' trucks had received twenty-four vehicle out-of-service notices in the past twenty-four months, out of seventy-four total inspections, for a 32.4 percent out-of-service rate. Also recorded were two crashes with injuries, and four more crashes requiring the vehicle to be towed. With this kind of safety record and experience, it is reasonable to assume that insurance costs would play a large factor in this company's demise.

Falcon Transport, founded in 1903 and based in Youngstown, Ohio, at last report had 700 power units and 585 truck drivers. Falcon ceased their operations in April but did not disclose the reason. In 2017 Falcon was purchased by CounterPoint Capital Partners of Los Angeles. Falcon was a logistics company with flatbed and over-the-road services for clients that included General Motors (GM), Ford, Nexteer, Arcelor Mittal, and U.S. Steel. Some conjecture that when GM closed their Lordstown, Ohio assembly plant in March, 2019 the loss of that business contributed to the parent company's decision to close Falcon.

In 2018, NEMF (New England Motor Freight) was ranked as the 17th largest LTL (less-than-truckload) carrier, generating more than $400 million in revenue, yet in February 2019, the company filed for Chapter 11 bankruptcy and shut down operations. The company, based in Elizabeth, New Jersey and in business since 1918, after two years of losses, cited continuing rises in overhead including the rising cost of labor, increasing regulations and tolls, equipment costs, and industry driver shortage, as reasons for the shutdown.

According to industry data from Broughton Capital LLC, in the first half of 2019 alone almost 640 trucking companies went bankrupt, more than triple the amount from the same period last year. While insurance costs are cited in many cases, it is not the only factor contributing to the closures. Many trucking companies blame rocky economic conditions, a weak freight market and soaring equipment costs as well. For example, the spot market for freight softened in 2019 after a robust 2018, causing some owner-operators to shutter operations, and trade tensions and driver shortages are also partly to blame.

Regardless, insurance costs are increasing and trucking carriers that have had questionable safety records are struggling to find insurance. As reported in FreightWaves, Chad Eichelberger, founder of Reliance Partners, a leading provider of insurance services to the trucking industry, said that carriers could see insurance rates double or triple in 2020 if they had any accidents with fatalities in the past year. According to Eichelberger, a small carrier with a clean history will pay $5,000-$7,000 in insurance per truck, but if a carrier is based in a high-risk jurisdiction, the rate could be 25 percent to 30 percent higher. Eichelberger listed Louisiana, New York, New Jersey, Florida, and California as high-risk states, and suggested that rates in Georgia and Texas are increasing dramatically as payout levels accelerate. 

The Truckload Carrier Association's (TCA) TPP benchmark platform reports that truckload fleets are currently paying $6,800 per truck for insurance. TPP data is considered the most reliable data of fleet costs in the trucking market, benchmarking and comparing fleet costs of approximately 500 data points per month. According to TPP data, flatbed operations were in the red for most of 2019, with only June 2019 showing operating profitability. 

Insurance will still be available with less costly increases for truckers with low severity, lower loss frequency and favorable safety scores who have been operating for more than five years. A number of standard market insurance carriers and alternative programs are available for these risks, as well as captives or options offering large deductibles or self-insured retentions.

However, few carriers will be willing to consider distressed trucking operations with fewer years in business, poor safety scores, and losses. For these trucking companies, rates will be much higher than with standard programs, and we will likely see many more trucking companies fall victim to closure when they do their benefit and cost analysis.