LTL news: Mid-States Express ceases operations, state reports
Jeff Berman, Group News Editor -- Logistics Management, 3/30/2009
AURORA, Ill.—Mid-States Express, an Illinois-based provider of less-than-truckload (LTL) and direct volume service, has shuttered operations due to financial and credit-related issues, according to media reports.
This news is the latest sign of the ongoing issues occurring in the LTL sector, which has been plagued by excess capacity, high inventories, and low consumer spending, among other factors.
Mid-States closed down all of its 26 facilities across nine states, which employed roughly 750 employees, following layoffs in recent months, according to a report in the LaSalle, Illinois News Tribune. At the time of its closing, Mid-States had 537 tractors and 1,082 trailers for city pickup and delivery and line haul operations, according to its Web site. Its service footprint was comprised of 13 states, and Mid-States also provided warehousing and distribution services.
On March 13, Mid-States issued an online statement for its customers, indicating that “due to the extreme economic conditions, [it] is adjusting its direct service coverage area.” This statement identified areas within its service territory that generated higher than normal costs of service—North Dakota, South Dakota, Nebraska, Kansas, Northern MN and Western MO—where operating and service costs—were greatly exceeding revenue. It added that in the past a significant portion of this area was served through partner carriers, but due to the poor economic conditions these partnerships were dissolved. Mid-States also closed down service centers in Omaha, Nebraska, Kansas City, Kansas, and Springfield, Missouri and took effect the week of March 16.
Company officials were unavailable for additional comment.
More LTL closings to come?: A research note from Morgan Keegan Equity Research said that it is possible more carriers may be shutting their doors, given the state of current market conditions.
“We expect carrier failures to pick up going forward given the particularly difficult freight environment at the end of 2008 and into early 2009 and the subsequent lag in revenue collections at some carriers,” noted the report.
And although it did not mention Mid-States by name, the Morgan Keenan report said that the exiting of “a carrier with slightly less than $100 million in annual revenues…represents the first in a series of mid-to-larger size operators shutting their doors in 2009.”
In a recent interview with LM, Stifel Nicolaus analyst David Ross cited data from Stifel’s recently-released LTL Industry 4Q08 Review and Outlook, which noted that LTL tonnage in the first quarter of this year should show more significant year-over-year declines than the fourth quarter of 2008 “in a very challenging environment with seasonally soft volumes,” adding that second quarter volumes “should be down significantly as well year-over-year due to the lapping of the stimulus checks/export pop of 2008.”
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