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Spike in insurance coverage charges result in shutdown of Carney Trucking

One crash is all it took. Carney Trucking Company, a
Gilbertown, Alabama-based flatbed carrier, has shut down, citing a spike in its
insurance rates.

“We had a major accident last year,” David Carney, one of
the family owned business’ owners, told FreightWaves. “Once we got the
insurance quote, we tried to make it work, but we just couldn’t.”

The fleet had about 25 drivers and had been in business
since 1983. Carney said that most of the drivers at this point have found other
jobs. He doesn’t know what his future holds – he’s been in the business for 27
years – but his brother Robbie may continue in the industry, David Carney said.

July 31, 2019, was the last day of operation for the fleet.

According to the Federal Motor Carrier Safety
Administration’s (FMCSA) SAFER Web website, the fleet had a
fatal crash in the past 24 months
and three additional U.S. Department of
Transportation reportable crashes in the past two years. In the past 24 months,
its vehicles had been inspected 70 times with a 31.4 percent out-of-service
rate versus a national average of 20.72 percent. A total of 109 driver
inspections had occurred in that timeframe with a 2.8 percent out-of-service
rate, below the national average of 5.51 percent.

Carney said the drivers “got all the vacation [pay] and
anything else we owed them.” There was also some additional pay provided, he
added.

FMCSA said the fleet had 28 registered vehicles that covered
2.1 million miles in 2017.

Trucking shutdowns have spiked this year, and insurance is
just one cause. Indiana-based A.L.A. Trucking shut down in early June and
company owner Alan Adams blamed the
FMCSA’s scoring system
for fleets that caused a spike in insurance
premiums.

“I didn’t do anything wrong with the company. It’s the way
the government has this new grading system that is affecting a lot of
companies,” Adams told FreightWaves. “If there’s a situation on the road where
a car comes off the on-ramp and bumps into a tractor trailer, until that claim
is settled, the insurance company charges a company with that claim.”

Adams said insurance for his 41-driver company climbed from
$340,000 to more than $700,000 in one year.

Other companies have cited low freight rates, lack of freight
and other reasons for their shutdown. Just last week, Schneider National
announced it was
shutting down its First to Final Mile business
due to a lack of
profitability. That shutdown put nearly 800 drivers out of work.

Also on July 30,
Terrill Transportation
of Livermore, California, ceased operations. That
fleet had 30 trucks and 36 company drivers as well as 12 owner-operators.

In addition to Schneider’s announcement last week, three of
the largest closures so far in 2019 have been New England Motor Freight, Falcon
and LME.

LME was a 400-truck less-than-truckload (LTL) carrier based
in Minnesota.
LME’s shutdown
may have been in part due to a National Labor Relations
Board dispute related to Lakeville Motor Express, a carrier that shut down in
2016. The Board called LME the “alter ego” of Lakeville.

Falcon’s shutdown was tied to
alleged mismanagement
, according to former executives of the company. Those
executives told FreightWaves the company was struggling to meet payroll even
after the sale to a private equity company.

New
England Motor Freight’s shutdown
in February shook the Northeast LTL
market. With roots going back 100 years, the nation’s 19th-largest LTL carrier
with more than 1,300 drivers had struggled financially for some time, but a
shutdown was not expected. But on February 12, the company concluded that after
two years of losses and the combination of high labor costs and a “severe”
driver shortage made it unsustainable to continue as a going concern.


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