CFI head Orr says inflation pressures threaten more trucking bankruptcies


Inflationary pressures are increasing chances of another large bankruptcy cost —or perhaps more—in trucking this year, a top industry executive tells LM.

Greg Orr, executive vice president of U.S. Truckload of Montreal-based TFI and president of CFI, a major truckload carrier, says he’s beginning to see effects of higher prices on everything from heavy trucks to fuel.

Orr made his remarks as trucking enters its fourth year of higher rates, tight capacity, and high profitability for most major carriers. But he says he sees ominous signs ahead.

“In all the years I’ve been in this business, we always seen pendulum swings,” Orr, a 30-year transportation veteran, said. “If it swings, you’re going to see a lot of companies overextended. That’s how we’re going to balance cards in the deck.”

CFI deploys nearly 3,000 professional drivers operating a fleet of over 3,900 tractors and more than 10,000 53-foot dry-van trailers throughout the U.S. and Canada, with cross-border service to Mexico.

If Orr is correct, the bankruptcies would occur in one of the greatest markets for trucking. But even in trucking’s most recent bull market, at least one huge cessation of operation has occurred in the last few years on both the truckload and less-than-truckload (LTL) side.

In 2019, Indianapolis-based Celadon, one of the 20 largest TL carriers and a major north-south carrier in and out of Mexico, ceased operations. In 2020, New England Motor Freight, the 17th-largest LTL carrier, closed up shop. And last year Texas-based Central Freight Lines, a 99-year-old carrier, closed before Christmas, idling 2,000 workers just before the holiday.

Of course, these closures occurred during one of the greatest bull markets in trucking. Orr said on the dry van side of CFI’s operation, CFI is turning down between 2,000-to-3,000 loads every week for lack of drivers.

“There are seven or eight loads for every driver out there,” he says.

Such a bull market contains hidden worries for Orr. The trucking veteran is concerned about some overextended competitors and larger geopolitical concerns, he said.

“As a country, we have to figure out how to get in front of inflation,” said Orr, noting diesel is nearing $4 a gallon in most of the U.S. Then there are worries about Russia possibly invading Ukraine, putting further pressure on world oil supplies. Currently, crude oil is priced around $92 a barrel in world markets, nearly double the price a year ago.

“I think there could be a recession. I hope I’m wrong,” Orr said.

The future of trucking will likely see the evolution of either electric or battery-powered heavy trucks. But they will probably be expensive—perhaps two to three times the cost of today’s Class 8 trucks, which are about $150,000 a truck.

“The migration to electric is fine but at end of day, somebody has to pay,” Orr said. “An electric truck is not going to cost the same as diesel. I don’t know many shippers who will pay two or three times their rates just to reduce our carbon footprint.”

As for fuel, most carriers are insulated somewhat by the universal fuel surcharge based on the weekly cost of fuel as calculated by the Department of Energy.

But Orr said in reality, effectiveness of the fuel surcharge for motor carriers depends on individual shippers.

“The majority of customers have their own (surcharge) programs,” he explained. “We provide our scheme, but most customers have their own. Some are more beneficial than others. Some try to dance around by using third parties.

“Most carriers are smart enough to work through it so fuel goes into the rate,” Orr continued. “For the most part, a majority of customers are reasonably fair in everything they do around fuel.”

What concerns Orr more than fuel are costs of other Class 8 engine liquids. For example, the cost of heavy truck lubricants recently rose 15%—the fourth such increase in the last 12 months, he said. Windshield wipers, which contain oil-based rubbers, similarly have gone up in price, according to Orr.

“Those types of things have such a growth on the cost side, it’s so hard to offset them with a rate increase,” he said.

The company also announced a streamlined driver compensation program to align driver pay for consistency across its trucking operations. Under this plan, drivers for CFI Truckload and CFI Temp-Control will receive an increase of $0.02 cents per mile.  Driver personnel can also qualify for extra earnings from incentive bonuses based on safety and productivity performance, retention and years of service, as well as recruiting referrals.

It won’t be the last driver pay increase for the year, Orr predicted.

“I’ve been here four years and we’ve had no less than one increase a year—most times, two. There’s probably another one following this in this year. We’re trying to boost our pay to stay competitive. But we also have competitors out there doing pretty astronomical things,” Orr added.

About the Author

John D. Schulz

John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. John is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis.

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