Tuesday, May 27, 2008

Trucking Industry Death Toll Hits Home

The U.S. trucking industry is getting its brains beat out. The latest victim: Jevic Transportation Inc., a New Jersey-based hauler with a significant Chicago-area and Midwest presence.
With virtually no warning to customers and employees, Jevic shut down last week. The company, which is backed by Florida-based private equity firm Sun Capital Partners, blamed rising fuel costs and an inability to get enough credit to keep its big wheels moving.
(Typically, Sun buys a company and then lines up financing for operations, etc.)
Jevic is the latest in a sorry convoy of nearly 1,000 trucking firms that have been driven out of business this year. That's bad news because these companies keep our economy rolling by moving food and other essential goods to businesses and consumers.
Old trucking outfits and new web companies have one thing in common--both can go bust in the blink of an eye. Jevic was no exception, despite having been in operation for nearly 27 years.
While Jevic's backers seek sanctuary in bankruptcy court, it appears the taxpayers will be footing bills the defunct trucking firm leaves behind.
For example, the company's estimated 1,000 employees are losing their health care benefits and are not be eligible for COBRA coverage, according to the company's web site. Without access to COBRA, many of those Jevic employees--and their dependants--will be seeking health care coverage or direct medical assistance from various states, including Illinois.
Meanwhile, Sun Capital--which specializes in buying distressed companies--is on a whale of a losing streak.
Besides plowing millions into Jevic, Sun Capital has also bankrolled three major retailers--Wickes Furniture, Sharper Image and Lillian Vernon--which have also gone into bankruptcy this year.
Sun Capital needs to get a little smarter or find a less risky line of work.
As for the rest of us?
It's time our elected officials do their jobs and start developing a realistic energy policy--one that provides relief from escalating fuel prices and grants a stay of execution to the U.S. transportation industry, especially those battered truckers that we depend upon.

(Photo courtesy of Google images and Images of Route 66)


Patricia Martin said...

Wow! What a story. It touches on so many angles of the declining economy: fuel costs, tightening credit, roll ups gone awry.

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