Flatbed Carrier Montgomery Transport Closes Down

Flatbed carrier Montgomery Transport ceased operations on October 9th and is expected to file for Chapter 7 bankruptcy, following a failed acquisition by PS Logistics. The shutdown resulted from owner One Equity Partners' decision to divest from the trucking sector due to persistent weak freight rates, high maintenance costs, and an aging fleet, leading to 650 job losses. This event underscores the severe impact of the prolonged freight recession, positioning Montgomery as one of its largest casualties.

Analysis

Flatbed carrier Montgomery Transport ceased operations on October 9th and is expected to file for Chapter 7 bankruptcy, following the collapse of an acquisition deal with PS Logistics. This shutdown resulted in approximately 650 job losses, marking Montgomery as one of the largest casualties in the current freight recession. The company's Federal Motor Carrier Safety Administration records indicated operations with 449 tractors and 458 drivers for its primary unit.

The primary driver for the company's failure was owner One Equity Partners' decision in June to divest from the trucking sector, citing persistent weak freight rates, high maintenance costs, and an aging fleet. One Equity Partners had acquired Montgomery in February 2022, indicating a relatively short and unsuccessful investment period before seeking an exit.

The attempted sale to P&S Transportation, a unit of PS Logistics, was derailed by a temporary restraining order filed on September 26th, preventing a planned Chapter 11 stalking horse bid. This legal impediment ultimately led to the carrier's immediate closure, despite the founder's refutation of blame.

This event underscores the severe and prolonged nature of the current freight recession, which is noted to be more than double the length of a typical downswing. Werner Enterprises CEO Derek Leathers recently reported 17 bankruptcies of carriers with over 250 tractors in the past quarter, signaling widespread distress within the industry.

Key Decisions for Investors

• Investors should closely monitor freight rate trends and operational cost structures across the trucking and logistics sector, given the prolonged recessionary environment and increasing bankruptcies.
• Evaluate existing portfolio exposure to flatbed and other trucking segments, considering potential contagion risks and further industry consolidation.
• Assess M&A strategies in distressed sectors with heightened scrutiny on deal certainty and legal risks, as demonstrated by the failed PS Logistics acquisition.