In a November 2018 article, private equity firm KJM was described as being “unlike the others” and “having daily involvement in the support functions of the business, allowing the company to implement growth initiatives and improve the customer experience.”
Unfortunately, for the 450 employees and stakeholders of Cold Carriers, a truckload roll-up assembled from four of KJMs acquisitions, the PE firm was not successful in running an asset-based truckload portfolio and filed Chapter 11 bankruptcy on Friday.
Cold Carriers was formed when KJM consolidated it’s acquisitions of Gantt Trucking, Sunco Trucking, Blue Sky Trucking, and Interide Transport, into a single operating parent. The company had 339 trucks, according to FMCSA data.
KJM is a private equity firm based in Orlando, Florida, that was launched in 2014 and made six acquisitions, five of which were in the transportation and logistics space. The firm says it is focused on acquiring private companies with EBITDA between $3 million to $10 million and revenues between $20 million to $100 million.
KJM’s first transaction was Gantt Trucking, an asset-based carrier out of Lexington, South Carolina. The 102-truck carrier is a temp-controlled carrier with operations east of the Rockies. KJM bought the company in April 2015.
The oldest carrier in the portfolio, Sunco, was previously owned by one of the most successful and powerful trucking families in the industry. The refrigerated carrier has 159 trucks and 282 trailers operating out of Lakeland, Florida. Sunco started operations in 1974 and was acquired by Watkins Associated Industries in 1997.
Watkins Associated Industries was the post-deregulation truckload spin-off of Watkins Motor Lines that included Land Span and Highway Transport. When Watkins acquired Sunco, it was combined with the temp-controlled truckload operations of Land Span. Later, in 2002, Sunco went onto acquire the Southeastern division of Rocor.
When Watkins Motor Lines was sold to FedEx in 2006 for $780 million dollars, the truckload assets remained part of the Watkins family for a few years. In 2012, Land Span was sold to Celadon and Sunco was renamed Watkins Refrigerated until KJM purchased it in September 2016, where it reverted back to operating under the Sunco brand. Watkins Industries is still around, but it is no longer involved in trucking or logistics.
Interide, a Salt Lake City, Utah-based truckload carrier has 135 trucks. Interide was acquired by KJM on December 22, 2016. The carrier has been operating since 1984 and stayed primarily in the Western half of the U.S. When KJM acquired Interide, they also purchased 30-truck operator Blue Sky Logistics, and consolidated the operations into Interide.
KJM is a buyout shop, using a leveraged buyout model of acquisitions. Leveraged buyout is a term that describes a firm using debt borrowed from banks and investors to acquire companies in the hopes of buying assets at a significant discount to the market.
In many of these models, the operating companies will be loaded up with debt and required to service it on behalf of the private equity group. It works in businesses that throw off significant amounts of cash flow, but rarely works in trucking due to the cash-flow cycles of the business.Private equity firms have a spotty track record in buying asset-based truckload carriers and making a profit.
Equipment depreciates quickly and must be replaced as the older equipment wears out and asset-based trucking is one of the most cyclical industries on the planet.
Earlier this year, HVH Transportation of Colorado and Falcon Transport of Ohio shuttered their doors, after their private equity groups cut off funding.
Often times, private equity take over a truckload carrier in one of two situations: when a family that operated the carrier decides to exit or when there is a forced liquidation (bankruptcy or recapitalization).
When founders leave the company, they are often replaced by management appointed by a PE firm that are not familiar with how to run an asset-based trucking company. These deals usually end poorly.
In 2019, at least 3,085 drivers have lost their jobs when the trucking company they were working for shut-down.
In an earlier version on the article, Holman of Caldwell, Idaho was mentioned as portfolio company, according to data from Pitchbook and a reference to a closed transaction on an advisory firm’s website. Since this article was originally published, we were informed that the Holman/KJM deal did not close and Holman was never apart of KJM.
The company had 339 trucks, according to FMCSA data. KJM is a private equity firm based in Orlando, Florida, that was launched in 2014 and made six acquisitions, five of which were in the transportation and logistics space.
Failing to create a solid business plan, poorly managing expenses, and missing important DOT compliance requirements can cause small trucking companies and owner-operators to shut down early on in their business ventures.
When Yellow, which dates back to the 1920s, ceased operations, it left 12,000 trucks, 35,000 trailers and 30,000 workers idle, which could form the foundation for a new business.
Bankrupt trucking transportation giant Yellow Corp shut its doors last year, and the $5.2 billion revenue-driving business was far from alone. More than 88,000 freight carriers pulled the operational plug in 2023 along with 8,000 freight brokers, according to analysis by CarrierOK.
High overhead costs: Trucking companies often face high overhead costs, such as insurance, licensing, and compliance fees. Companies that are unable to keep these costs in check may find it difficult to remain profitable.
Better times are ahead for the trucking industry and 2024 will be an improvement over the previous year, but progress will be incremental. It's important that, as the market continues to rebound, companies stay mindful of current trends in order to remain competitive.
As notified previously, Yellow's participation in the Central States Pension Fund remains terminated effective July 23, 2023. As of July 23, 2023, active members stopped earning additional pension benefit accruals on that date.
Yellow Corp. trucks sit idle at a company facility on July 31, 2023 in Hayward, California. Nashville-based Yellow is closing its doors on the verge of bankruptcy after years of financial struggle. The closure will cost 30,000 jobs, including those of 22,000 Teamsters union members.
In August, one of the nation's largest trucking companies, Nashville-based Yellow Freight, declared bankruptcy and closed its business. That left more than 30,000 people without jobs. A majority of those positions were in a union — a rarity for the trucking industry, as most freight carriers are not union shops.
In the list of top 100 for-hire trucking companies for the year 2023, UPS Inc. holds the top position with a staggering revenue of $100.3 billion, followed by FedEx Corp. with revenue at $92.61 billion. However, FedEx surpasses UPS in terms of employees, counting 547,000 compared to UPS's 536,000.
A purge in trucking has been predicted since the start of 2022 when inflation and rising interest rates brought an end to the post pandemic economic recovery. As a result, a natural correction is occurring, as weaker operators are squeezed out of the market.
Burnout impacts drivers' personal life, health, and job performance. It can also cause them to quit. Research into the link between burnout and turnover in trucking generally analyzes three dimensions of burnout: overwhelming exhaustion, feelings of cynicism, and inefficacy.
The Hazmat industry has some of the best paying trucking companies. This is because Hazmat hauling involves transporting hazardous materials such as chemicals, fuel and explosives.
The biggest fleet in the U.S. belongs to PepsiCo, Inc. It owns 11,079 tractors, 16,138 trucks, and 6,682 pickup trucks and cargo vans. PepsiCo also owns 20,105 trailers for securing goods in transit.
The freight industry has been in recession for more than a year, hampered by overcapacity and lower demand for goods after people shifted to spending on services and entertainment after being cooped up during the pandemic.
A lack of new drivers coming into the industry – due to the working conditions, low pay, and lack of benefits, many people avoid entering the trucking industry. Drivers leaving the industry – many truck drivers are leaving the industry in search of jobs that offer better pay, working conditions, and benefits.
Introduction: My name is Gregorio Kreiger, I am a tender, brainy, enthusiastic, combative, agreeable, gentle, gentle person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
