New Century’s Shutdown Leaves Workers Scrambling

This story appears in the June 16 print edition of Transport Topics.

New Century Transportation Inc., which reported $267 million in revenue last year but was plagued by funding problems, abruptly shut down and filed for bankruptcy last week, leaving nearly 1,600 workers scrambling to find new jobs.

The New Jersey-based company filed under Chapter 7 of the federal bankruptcy code on June 11.

As it outlined plans to liquidate, several sources said Northeast area truckers were being bombarded with applications from more than 1,000 drivers, who are likely to quickly find new posts due to the ongoing driver shortage.

New Century’s 2013 revenue would likely have made its rank No. 88 on the 2014 edition of the Transport Topics Top 100 largest for-hire carriers in the United States and Canada. The list will be published on July 14.

The bankruptcy filing comes two days after workers were sent letters saying New Century was closing down after 14 years.

“New Century and its lenders diligently attempted to find solutions to deleverage the company’s balance sheet,” a statement posted on its website said. “The best way to maximize value for the benefit of all creditors is to wind down the companies in a bankruptcy proceeding.”

CEO Terry Gilbert labeled the move “the best alternative under difficult circumstances,” while also telling TT, “We were winning; the clock just ran out.”

A spokeswoman for lender Jefferies declined to comment when asked by TT.

Harry Muhlschlegel started New Century in 2000 after selling Jevic Transportation to Yellow Corp. in 1999. Jevic closed its doors in June 2008, almost six years to the day of New Century’s shutdown.

Both companies used a hybrid model, blending truckload and less-than-truckload services depending on the market, and focusing on chemicals and temperature-controlled freight.

New Century’s drivers approached Northeast fleets such as New England Motor Freight, and other competitors received a steady stream of applications.

Tom Connery, chief operating officer of NEMF, based in Elizabeth, New Jersey, a unit of TT100 No. 57 Shevell Group, said applications poured in at terminals in New Jersey and Maryland. He said the company was offering faster access to benefits such as medical coverage as an incentive.

Jeff Migala, director of operations at Medway Express, a truckload carrier with 20 trucks in Sewell, New Jersey, told TT “this [shutdown] was a shame. We are trying to help as many guys as we can.”

“LTL carriers have selectively taken up some of the business,” said Jason Seidl, a Cowen and Co. analyst, while identifying a broader motive. “The business is nice, but it is secondary to getting additional, quality drivers.”

The failure also is likely to buoy an already strong LTL pricing environment, Seidl said. During the second quarter, several carriers in that sector have said rates are rising along with higher business levels.

Gail Toth, executive director of the New Jersey Motor Truck Association, said that a number of fleets have reached out to sign up drivers. In fact, she said six New Century drivers have signed up to, and will, participate in the state’s truck driving championships later this month.

“Everybody is in need of drivers,” said Toth, adding that her group is working to help all former New Century employees — drivers and office workers alike — on an individual basis. “There are a ton of job openings. Drivers are going to have their pick of what job they want.”

New Century’s precise financial plight isn’t known because it is privately held, but the bankruptcy filing form showed both assets and liabilities between $10 million and $50 million.

In a 2010 Securities and Exchange Commission filing, when New Century was evaluating a potential initial public offering, some debt was listed with 13% and 14% interest rates.

Jefferies decided not to add more equity, which forced banks to cut off funding, according to John Larkin, a Stifel Nicolaus & Co. analyst.

“Muhlschlegel seemed to be the only one in the world who could make the load to ride TL-LTL hybrid model work effectively,” he told TT. “That great operational mind was never systematized, unfortunately for the owners of Jevic and New Century.”

New Century’s Western Freightways and broker Northwinds Logistics also were included in the filing.

The failure was the industry’s largest in more than a year, rivaling the shutdown and bankruptcy of Allied Systems Holdings, a car hauler that had its assets acquired by No. 53 Jack Cooper Transport, another car hauler.

New Century’s federal Worker Retraining and Adjustment Act notice was filed on June 9. Gilbert, a former senior executive at Roadway Express who was hired in 2012, told employees in a letter that the legally required 60 days advance notice was impossible because funding was withdrawn suddenly.

New Century’s notice said it would pay currently due wages, provide access to retirement plan funds and access to the extended health benefits.