Auto Haulers Eye Initial Jack Cooper Tailwind in Weak Market
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The collapse of auto hauler Jack Cooper Transport is expected to provide an initial tailwind for other carriers in the sector, and possibly stimulate some appetite for mergers.
However, weak light-vehicle demand that stymied auto haulers as 2024 wound down is expected to continue, as industry observers say macroeconomic trends point to further downside.
The auto hauling sector is a bifurcated market, with the top 10 players holding 70% of the action and the other 30% of the pie spread out between a very large number of very small players.
Second-ranked Jack Cooper held about 13% of the market before auto giants Ford and GM pulled their business within the space of roughly six weeks. Dearborn and Detroit, Mich.-based Ford and GM were the cornerstone contracts among eight major original equipment manufacturer customers, sources said. Indeed, the auto hauling sector has a lot of captive volume, particularly as a number of major players are also brokers, Stifel Research Director for Transportation Bruce Chan told Transport Topics.
The closure of the Kansas City, Mo.-based Jack Cooper immediately shifted the demand side of the equation in the auto hauling marketplace, Chan added. The auto hauler’s collapse is putting revenue up for grabs that had not been in play for decades, added Tenney Group CEO Spencer Tenney.
Jack Cooper had nearly 1,300 tractors and a similar number of trailers at the end of 2023, according to TT data. Of those tractors, 857 were company owned and 429 lease-to-own, the data shows. The company had around 2,000 employees.
Ford decided in January to end its relationship with Jack Cooper, bringing the curtain down on an approximately 40-year relationship. Jack Cooper then lost its biggest and oldest customer, GM, at the start of February.
Jack Cooper’s share of the market is expected to be redistributed on a pro-rata basis to the rest of the industry, Chan said.
Ford was mum when contacted by TT about who was hauling its finished vehicles now. “We do not comment on our contracts or relationships with individual suppliers,” the automaker said in a statement provided to TT.
Proficient emerged from the combination of five auto haulers and went public in 2024. (Proficient Auto Transport)
GM was similarly tight-lipped. “We can confirm that Jack Cooper Transport management informed us of their plans to unilaterally stop services to GM, effective Feb. 7. In light of this material breach of their agreement and the ongoing and timely needs of GM’s business, we implemented contingency plans with other providers. We do not anticipate any further disruptions to the delivery of our vehicles,” a spokesman said in a statement.
GM did, however, shed some light on the prospects for Jack Cooper’s drivers.
“We are grateful to all the Jack Cooper Transport employees for their work to support GM over the years. Importantly, we are helping identify positions at other businesses for impacted JCT employees, and we believe that a significant portion will be successfully transferred,” said the spokesman.
Industry sources suggest the majority of Jack Cooper staff who worked on the Ford contract have found employment with carriers that captured some of their former employer’s business.
Blue-chip automakers tend to have contingency plans in place, even for this kind of large-scale disruption to their operations, according to a senior industry executive.
O'Dell
“If you look at the cycle and how customers would generally react to a situation like this, they may have a backup contracted carrier and that business would potentially move to that backup carrier right out the gate and then they would probably put it out to bid over a period of time,” Proficient Auto Logistics CEO Rick O’Dell said during a Feb. 12 call with analysts.
Proficient, which emerged from the combination of five auto haulers and went public in 2024, is the fourth largest player in the sector, according to TT data. The merged entity had 1,130 auto transport vehicles and trailers, including 615 company-owned transport vehicles and trailers, when it went public. The 615 company-owned tractors and trailers had an average age of around 5.8 years and 5.6 years in November 2023.
In comparison, Jack Cooper’s rolling stock had an average age of around 12 years, said Chan, after a significant period of under-investment in equipment as it battled costs inflated by employing a unionized workforce. Costs at unionized players such as Jack Cooper typically average 30% higher than those of their non-unionized peers, according to multiple sources.
As a result of the advanced age of the trucks and trailers, only 20% of the rolling stock is expected to be attractive to remaining players in the sector, sources said, adding that parallels with the demise of bankrupt less-than-truckload carrier Yellow Corp. do not extend to its equipment.
Visser
“At present, that capacity has been removed from service, so we should see a bump in spot rates for the auto hauler segment as Jack Cooper’s former loads are brokered to available drivers,” Chris Visser, director of specialty vehicles at J.D. Power, told TT.
“As for the trucks and trailers themselves, market impact will depend on how Cooper’s creditors handle the liquidation,” Visser added.
Appetite for the trucks and trailers, however, is somewhat hampered by the lack of an adjacent market to which specialized equipment can flow.
In markets where organic growth is minimal, inorganic growth through merger is often the result, and multiple sources said Proficient was the most likely aggressor in the auto hauling space, particularly as the publicly listed company likely has easier access to capital markets than its privately held peers.
O’Dell, Proficient’s top executive, as much as confirmed this during the earnings call on Feb. 12, telling analysts: “We have a pipeline of opportunities that will be a nice fit for us — providing synergies and adjacent geographical capacity. We’re obviously managing that or balancing that against other priorities and opportunities that we have. But I would say, we’re still active in the marketplace and we would probably expect one to two smaller acquisitions to occur this year.”
But against a background of weakening demand for auto hauling services in 2025, any buyers may seek to keep their powder dry.
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