P.A.M., Celadon deal falls through; logistics ‘bright spot’ amid COVID-19

Tontitown-based carrier P.A.M. Transportation Services Inc. looked to purchase Celadon Group’s Mexico business in a $7 million deal before the COVID-19 pandemic, but the deal is apparently off.

Meanwhile, logistics remains a “bright spot” amidst the health crisis as long-haul trucks continue to deliver needed goods nationwide, an analyst said.

Celadon announced Dec. 9 it would file for Chapter 11 bankruptcy, and a February filing in U.S. Bankruptcy Court for the District of Delaware showed P.A.M. was seeking to buy Celadon’s Mexico business, including carrier Jaguar Transportation. Court documents filed April 30 show the deal with P.A.M. had fallen through and that Celadon was working on a deal to sell its Mexico businesses to White Willow Holdings for $2.4 million, according to a recent FreightWaves article.

White Willow, which is backed by Luminus Management, “put forth the best offer” for the businesses, the article shows. The deal also would provide for 78% of Mexican tax refunds owed to Celadon — worth as much as $18.5 million — to go to Celadon’s creditors, according to the article.

Celadon pursued a deal with White Williow because P.A.M. wanted to negotiate the terms of its non-binding $7 million agreement, court documents show.

P.A.M.’s Feb. 8 offer to purchase the Mexico businesses came before the COVID-19 pandemic that’s disrupted the carrier’s business. About 45% of the company’s business comes from the automotive industry, and that revenue stream was cut when the carrier was notified that all automotive plants would close in the week of March 15.

On April 14, P.A.M. reported a $1.3 million loss in the first quarter. Revenue rose narrowly to $129.15 million. On May 1, P.A.M. President and CEO Daniel Cushman retired. He will remain as a company adviser through July 31.

In a recent report, Bob Pishue, transportation analyst for INRIX, highlighted the impact of the COVID-19 pandemic on long-haul trucking. Personal travel has declined 46% while truck travel has fallen 13%, which might indicate that consumer demand is still strong, according to the report.

“While the COVID-19 crisis continues to sweep the country and the world, one rare bright spot is the vitality of the logistics network,” the report shows. “Throughout the country, long-haul trucks continue to make their trips at nearly the same amount preceding the crisis but don’t have to contend with the congestion around urban areas that typically stifle productivity.”

Regionally, differences in freight travel range from a 6% to a 17% decline, and this accounts for western and southern Gulf regions, respectively. Manufacturing and oil states have had the largest declines in the travel, including Michigan, Kentucky and Texas, down 37%, 20% and 20%, respectively. Also, freight-dense corridors in urban areas have had large travel speed increases, reducing barriers to move goods faster.

Measures to stop the spread of COVID-19 have contributed to the reduction in traffic and traffic congestion. Interstates and highways in the southern Gulf region have been the most impacted amid the health crisis.

Though personal vehicle-miles traveled declined 46%, freight transportation has fallen 13%, “proving commercial trucking is resilient during COVID-19, and a key part of the country’s efforts to recover from the pandemic,” the report shows.

Passenger vehicles account for the majority of vehicle miles traveled and have a direct impact on the transportation of goods and services throughout the country, according to the report. These vehicles have a significant impact on congested corridors, increasing delays and incidents on the roadway. And much of the road funding comes from fuel taxes, license fees, tolls and other taxes.

California issued the first state-wide, stay-at-home order on March 19, and INRIX Research has tracked travel trends regarding personal and freight transportation since the start of March. Personal vehicle-miles traveled declined starting March 14 as employers implemented work from home policies. In the week of March 14-20, personal vehicle-miles traveled declined 20%. Freight vehicle-miles traveled declined 1%.

In the week of March 21-27, personal vehicle-miles traveled fell 27% from the previous week and was 42% below normal. Freight vehicle-miles traveled fell 7%, from the previous week, and were down 6% from the baseline. In the week, 21 states had stay-at-home orders.

From March 28 to April 3, personal vehicle-miles traveled became stable and reached 47% of normal levels. Freight vehicle-miles traveled were flat from the previous week. Seventeen more states issued stay-at-home orders.

Between April 4 and April 10, personal vehicle-miles traveled were 48% below normal levels. Freight vehicle-miles traveled declined to 10% below normal levels. Six more states issued stay-at-home orders.

From April 11-17, personal vehicle-miles traveled rose 2%, and freight vehicle-miles traveled fell to 13% below normal, likely related in part to the Easter holiday. States started talking about easing restrictions to prevent the spread of COVID-19, while 95% of U.S. residents remained under stay-at-home orders.

The southern Gulf region, which includes states such as Arkansas, Mississippi and Texas, has had the largest decline in freight vehicle-miles traveled since the start of the pandemic and was down 17%. The western region, which includes states such as California, Washington and Wyoming, has been the least impacted U.S. region and was down 6%.

In Arkansas, freight vehicle-miles traveled have fallen 18% since the start of the pandemic. Only Texas and Kentucky have had a larger decline in the southern Gulf region and were down 20%, respectively.

The region “is home to three of the top five states in long-haul trucking contractions,” the report shows. “The reduction in freight movement may be partially due to hard goods manufacturing, as it represents a large portion of the Gross Domestic Product in these states.”

The metro area with the largest increase in highway travel speeds amid the pandemic was San Francisco with a 51% rise during morning rush hour at 8 a.m. and a 60% increase during evening rush hour at 5 p.m., the report shows. Los Angeles noted a 46% increase in travel speeds during morning rush hour and a 59% increase in travel speeds during evening rush hour. Boston had a 33% increase in travel speeds during morning rush hour, while Houston and Tampa, Fla., both had a 44% increase in travel speeds during evening rush hour.

Trucks on Interstate 405 in Los Angeles had the greatest time savings in the morning and evening commute periods as travel times fell more than 73% during evening rush hour. Travel times fell 65% for trucks on Interstate 90 in Chicago. In Atlanta, travel times decreased 52% for trucks on Interstate 285 during evening rush hour. Traffic congestion costs the United States $88 billion in lost time idling in traffic, according to the 2019 Global Traffic Scorecard.

“Freight corridors should be top of mind as the public and private sectors work toward investing in a federal infrastructure package,” Pishue wrote in the report. “Ensuring these vital arteries are preserved and maintained will also be a welcome sight to drivers and consumers across the country as we recover from COVID-19. Looking at the country’s busiest freight corridors, these time savings enable the rapid delivery of goods throughout the country — especially in this time of need.”