More Celadon fallout: Next steps for two operators

user-gravatar

Trucker Bo Wells of Pachuta, Miss., is set to go through an orientation program with a new carrier on Wednesday. He delivered his last load with his employer of about three years, Celadon, Sunday night and “bobtailed to this truck stop in Dallas,” where he sat yesterday when we spoke — a Pilot on I-20. There he continued pondering the uncertainty of what will be the next couple of weeks.

Celadon, as regular readers I’m sure are aware, finally notified its thousands of employed drivers and leased owner-ops by message sent out over its in-cab units just after midnight Sunday that the company was shutting down, that everyone would be paid for their work and that instructions would be coming for just where to take company-owned equipment (Wells got his dispatch to drop the truck at the Waxahachie, Texas, terminal, relatively close by).

By that point, Wells says, the news had already trickled out in a variety of ways. For Wells and other operators in a formerly private, small “Celadon Drivers” group on Facebook, “the rumors that everybody else heard had been floating around since last Thursday evening.”

Trucker Bo Wells of MississippiTrucker Bo Wells of Mississippi

That day, Wells says, those operators began to get wind of the coming storm through lease-purchase drivers with the company who’d entered into agreements with Transport Enterprise Leasing (TEL), headquartered in Chattanooga, Tenn., and whose office is in the same building as Covenant Transport, a significant investor in the company, following all the issues the Celadon-affiliated Quality Companies leasing outfit had experienced over several years. Wells suspects TEL got out ahead of Celadon’s notice to its own driver force by offering an unknown number of operators with lease-purchase contracts at Celadon the opportunity to move their leases to one of a few different carriers at no additional cost — or a carrier of their choice outside of that small group of options with some further investment.

Celadon itself told those same lease-purchase operators, Wells had heard, that it was a matter they could work out with TEL, before eventually confirming Sunday night/Monday morning the real reason for the renegotiations — that the carrier was going under.

“TEL did go out of their way without charging a fee to move the truck over,” with one of the few options given, Wells believes. “Some of the drivers told them that they needed more time.” TEL told them if that was the case to get to a secure location and “call and let them know where they were going to park the truck. They’d waive the insurance costs to park in a secure location. TEL did do those guys real well with that.”

Calls to TEL offices went unreturned as of this publication.

UPDATE 12/11/2019:
Transport Enterprise Leasing (TEL) moved quickly over the weekend to get in the neighborhood of 40 operators currently in lease-purchase contracts with them to new homes with partner carriers, says Doug Carmichael, the company’s CEO and a cofounder. “We helped place between 30 and 35 of them with carriers we do business with,” Carmichael said Wednesday, adding that 10 operators with one particular partner had gone through orientation today.

Frankly, he didn’t expect such a level of success. “I was expecting we might keep a little more than half” in business with a different carrier, he says, so “I was pleased.” Very few of the lease-purchase operators opted to end the contract.

The company expresses commitment, too, Carmichael says, to assisting operators worried about the interruption in cash flow that undoubtedly comes with downtime. “We’re going to work with them so that they can get re-established.”

TEL has lease-purchase programs in place with around 10 carriers, Carmichael says, where initial start-up fees for the lease term are low given payments are set up to automatically remit from the carrier to TEL. Celadon had been one such carrier before this past weekend. In the case of the former Celadon operators, “we could have placed them with anybody in our group” of carriers without additional fees, Carmichael notes. Any trucker who leases through TEL also has the option to take their truck anywhere they would like. In such cases, start-up fees are higher, given the absence of the assurance of lease payment deductions at the carrier. Carmichael likens higher costs in those situations to the commitment to a deal that a down payment on a truck represents in a traditional financing arrangement. END OF 12/11/2019 UPDATE

Ohio-based former Celadon-leased owner-operator Steve Randall, a moderator of the drivers’ Facebook group Wells mentioned, knows of at lease one lease-purchase driver still in an arrangement with Quality Companies. (Celadon had intended to wind that business down, according to prior reports, after being at the center of investigations that eventually contributed to the company’s demise.) Randall heard that driver had been instructed to, after delivering a final load, take the rig to the nearest location of large auctioneer Ritchie Bros.

On a somewhat hopeful note, at the very least, there are plenty of fleets offering a home for former Celadon operators’ services, and the drivers’ Facebook group going public has made it one of a few central places for direct recruiting, Wells and Randall both noted.

Owner-operator Randall already knew something was going on, but it could probably all have been classified as rumor before he had a big maintenance bill late last week on his 2017 Kenworth W900. The maintenance escrow account he held and put money routinely into with the fleet wasn’t going to cover the entirety of the bill, and Celadon “wouldn’t approve the financing on the rest of it,” he says. Such approvals had been routine in the past.

Sunday night he found out why. Other than the recent surprise closure, though, he says Celadon “has taken care of us” through his time with the company. Formerly a lease-purchase driver with the company, his success enabled him to get to where he is today as an owner-operator outright. He bought the 2017 KW himself, not through a lease-purchase deal.

And he, too, has quickly found a home for his business, likewise a pledge given on the needed repair, via Baylor Trucking of Milan, Ind. He’s going through orientation to lease on there today. A representative of the company had done some Facebook live videos through the group page and then Baylor’s owner “reached out to me” and told him: “‘I don’t care if you come to my company or not. I want to fix your truck,'” Randall says. “I’ve never had somebody say that to me.”

Randall takes heart in the outpouring of support he’s seen for himself and others and is hopeful he can be a part of linking former Celadon drivers to more of the same via the Facebook group.

At once, it’s certainly possible things could have been handled better, Wells believes, given so little time to prepare for being out of work. Many of Celadon’s customers, he thinks, knew all too well what was coming. “Friday I talked to my driver manager,” he says, who told him “a lot of freight was being canceled. She didn’t know anything for sure, she said, but it looked kind of funny — the way everybody’s loads were picking up, it seemed like they were trying to get people close to terminals, and other loads were cancelling.”

He came to the conclusion that the company notified its customers well before it notified its drivers and dispatch personnel, and the fact of that matter rankles, to a degree.

At the same time, Wells used the tools available to make speedy work of the application process, helped by the “Driver Pulse” application from the TenStreet company. He applied quickly to a few different companies, settling on Swift Transportation for now. He starts orientation at the company’s Dallas-area terminal Wednesday.

“It will probably be two weeks before I’m earning again,” he says. “I’ll hopefully have a good check the week before Christmas – normally this wouldn’t bother me so bad, but I’m one of those last-minute Christmas shoppers.”

The Business Manual for Owner-Operators
Overdrive editors and ATBS present the industry’s best manual for prospective and committed owner-operators. You’ll find exceptional depth on many issues in the 2021 edition of Partners in Business.
Download
Partners in Business Issue Cover