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TFI International Inc. is closing its 150-truck Highland Transport division, a possible sign of softness in the Northeast freight market, according to a TFI official.
Montreal-based TFI announced that the closure of the cross-border unit would be complete at the end of June. It comes after TFI reported record first-quarter results for 2019.
Closure of fleets has been a rapid occurrence lately. Highland Transport follows the failure of New England Motor Freight, which announced bankruptcy filings in mid-February; and the April closure of Eastern Connection, a 35-year-old regional carrier hauling freight from Maine through Virginia.
The three trucking firms did business in the Northeast, and that is where some freight market weakness exists, according to one TFI official.
“There is softness in the market,” Brent Neill, TFI vice president of human resources, told Transport Topics. “And there’s a lot of competition.”
That competition in the freight market has affected the north-south corridors of trade between Canada and the United States, and not so much the east-west corridors, said Neill.
A trucking official in New England blamed some of the freight problems on people and businesses fleeing the Northeast because of taxes and regulations. Joseph Sculley, president of the Motor Transport Association of Connecticut, said state government leaders have failed to keep businesses and residents in the state.
Bloomberg News ranks Connecticut as No. 1 in outward migration of income in the Northeast.
Bloomberg’s analysis of state-to-state moves, based on 2017 data from the Internal Revenue Service and the U.S. Census Bureau, found Connecticut lost the equivalent of 1.6% of its annual adjusted gross income, or $2.6 billion. (Those moving out of the Connecticut had an average income of $122,000, which was 26% higher than those migrating in.)
The combination of fewer businesses and fewer residents creates a “smaller universe” in which to do freight business, Sculley said.
Following Connecticut in the Northeast were New York and New Jersey, ranking Nos. 5 and 7, respectively. New York lost $8.4 billion in income, or 1.1% of its annual adjusted gross income. New Jersey lost $3.43 billion in income, or 0.93% of its annual adjusted gross income, according to Bloomberg.
For that reason, for about a year, members of the Motor Transport Association of Connecticut have been telling Sculley that while the national freight market looks strong, they “have not noticed the same trends within the state of Connecticut.”
Bloomberg’s analysis also shows Florida and South Carolina picking up the most income from those migrations.
Florida, for example, saw its income jump by 2.87%, according to Bloomberg, netting $17.22 billion in inward migration of income.
The weakness in the Northeast had effects on TFI’s Highland Transport, and over time Highland’s financial results became “less than stellar” given the new competitive environment, said Neill.
New England Motor Freight announced bankruptcy filings in February. (David B./Flickr)
Highland Transport was founded in 1967, and was based in the greater Toronto area. TFI will work to relocate the unit’s 150 drivers and owner-operators within the company, said Neill.
TFI provides parcel delivery, truckload and less-than-truckload freight hauling, plus warehousing and transportation management services and logistics throughout North America.
In April, TFI’s first-quarter net income was C$65.1 million, or 74 cents a share, compared with $48.2 million, or 53 cents, a year ago. Revenue rose 3% to $1.23 billion compared with $1.19 billion in the first three months of 2018.
TFI International ranks No. 9 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
Eastern Connection was a freight carrier based in Lincoln, R.I. It announced its closure on its website April 11.