On Monday morning, I read the headlines about truckload carrier Celadon, which filed for Chapter 11 Bankruptcy protection and has already begun to wind down its business operations. The move leaves many administrative employees out of a job in the midst of this holiday season as well as leaving many of its truck drivers stranded without resources. (Truck drivers’ fuel cards were turned off on Monday, leaving drivers without a way to get home short of shelling out a lot of cash for fuel or scheduling their own transportation/deliveries.)
The Indianapolis-based company, which once grossed $1 billion as of 2015, may just be the largest truckload bankruptcy in history. If that isn’t bad enough, Celadon currently owes its 3,800 employees more than $3.9 million in unpaid wages as well as $1 million in termination bonuses.
Last Thursday the SEC charged two former Celadon executives in a multiyear accounting scandal. The scandal triggered an overhaul of Celadon’s management at a time when the company was attempting to recover from other financial issues. Prior to 2015 when the scandal came to light, Celadon’s stock was worth more than $20 per share, but on Friday it plummeted to just $0.41 per share.
Celadon’s Chief Executive Officer, Paul Svindland maintains that the company did everything that it could to keep its operations up and running, but that it was impossible to save the company.
Just one of the difficulties that the company faced was its mounting debt, owing $293 million in long-term liabilities including multi-millions in long-term debt capital leases, deferred taxes, and to the Justice Department. As it stands the company owes $98 million. Celadon’s treasurer, Kathryn Wouters has estimated that as of the end of September the company’s assets amounted to $427 million.
If you’re a Client; What Can You Do?
While horrible for those companies that entrusted their loads with Celadon and have been negatively impacted by its bankruptcy filing, there are a few things that can be done right now as well as in the future, in order to protect your company.
1. Secure any undelivered loads.
If you have tendered any loads to Celadon and they are still in transit and have not been delivered, you may want to take a look at the Bill of Lading (BOL) to locate your specific driver’s name in order to make contact with him or her. This information is often available because drivers must sign when take possession of the freight.
2. Build a portfolio of characters.
Having a portfolio of carriers generally ensures that even in situations in which your load has issues, your supply chain can continue. When you only use one carrier for any particular mode, you limit yourself of options for building a diversified portfolio, which can also ensure capacity in times of shortage.
3. Take advantage of a third party’s emergency management process.
Whether you work directly with carriers or with a third party provider you should have in place an emergency process for each of your shipped loads. There’s nothing quite like having the support of others. This holds true for having a third party team, which is there to make any emergency situation manageable.
4. Maintain an overall supply chain strategy.
One of the most important things to do is to discuss your supply chain strategy – and to have one in place. Such a strategy will focus on driving down operational costs while maximizing results. It will also allow you an opportunity to decide on how you wish to work with other partners such as suppliers, vendors, and customers.