Happy Hump Day. In today's feature story, we're breaking down the latest news on one of 2024's biggest bankruptcy stories: KAL Freight. Drivers fear a sudden shutdown, creditors scramble to settle debts, and allegations of fraud taint the reputation of the company.
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🐔 WHAT’S COOKIN’ IN FREIGHT
The DAT market conditions map isn’t looking good—southern Texas is the only hot spot.
🤷♀️Where Are The Loads? According to DAT Market Conditions, the U.S. freight scene ison ice. The majority of the map, excluding two key southern parts of Texas, is blue. Many have been left reeling because of this decline, with some commenters on an Instagram post on the matter stating they are at a “30-50% loss right now from last year.” While some preach patience, many do not feel optimistic about the current state of freight. Furthermore, Kary Jablonski, DAT, posted data on her LinkedIn showing that while Canadian spot market freight inbound from Canada to the U.S. rates are normalizing, the volumes have “fallen off a cliff” within the last week. With so much optimism for change heading into 2025, it seems darkness is still looming over the freight industry.
📃 Arkansas Cracks Down on Non-Citizen Truck Drivers. Arkansas lawmakers introduced the Secure Roads and Safe Trucking Act of 2025 (HB1569) to tighten regulations on non-citizen commercial drivers. The bill mandates a U.S.-issued CDL and English proficiency to operate commercial vehicles in the state. Violators face $5,000 fines, vehicle impoundment, and felony charges for accidents. Trucking companies hiring ineligible drivers could be fined $10,000. Canadian CDLs will no longer be recognized. A truck driver celebrated the law (reposted via Wall Street Apes), applauding Governor Sarah Huckabee Sanders for prioritizing American documentation and English-speaking capabilities.Gord Magill also supports the move, even going so far as to state why the viral clip shows that the bill “is important.” The bill is currently under committee review.
📉 Class 8 Truck Orders Plummet. North American Class 8 truck orders fell 34% year over year in February, totaling 18,300 units, reflecting ongoing market instability. Analysts cite tariff threats and impending emissions regulations as key factors dampening demand. ACT Research reported the lowest seasonally adjusted orders in nearly two years, while FTR Transportation Intelligence noted a 38% year-over-year decline. The uncertainty surrounding trade policies and economic conditions has slowed business investment, with manufacturers considering costly production shifts to mitigate tariff impacts. Dan Moyer, senior analyst of commercial vehicles at FTR, remains cautiously optimistic but acknowledges the challenges ahead. He stated that even if tariffs went away, others could still impact the industry, such as tariffs on steel and aluminum, thus making “strategic changes costly, complex, and time-intensive.”
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“There is no viable ongoing business; there is no income; and there is no liquidity to further maintain the status quo.” – The Committee of Unsecured Creditors
The California-based trucking company, once a fast-growing mid-size carrier, is now in the middle of a financial meltdown, complete with fraud allegations, lawsuits, and a bankruptcy process that could leave drivers and creditors in the dust.
The Rise & Expansion
Founded in 2014, KAL Freight quickly grew into a mid-sized powerhouse with:
Roughly 800 trucks, 2,200 trailers, and 800 drivers
Warehouses and terminals in California, Texas, New Jersey, Indiana, and beyond
New business divisions in trailer leasing, truck parts, and tires
But this aggressive expansion came at a cost—one that became unsustainable as freight rates tanked post-pandemic.
The Fall: Bankruptcy & Fraud Accusations
In December 2024, KAL Freight filed for Chapter 11 bankruptcy (a reorganization process that allows companies to restructure their debts while continuing operations), blaming market conditions. But court filings revealed far deeper problems, including allegations that KAL Freight:
Financed non-existent trailers: securing loans for equipment it never received.
Double-pledged collateral: using the same assets to secure multiple loans.
Transferred assets improperly: moving trucks and trailers to affiliates without creditor approval.
Major creditors like Daimler Truck Financial Services and Bank of America claim fraudulent financial practices and are fighting for control of the company's remaining assets.
Bankruptcy court documents showed the company owes $325M to creditors.
From KAL Freight’s Own Attorneys:
“[KAL Freight] has been the subject of various allegations of malfeasance, including that certain personnel improperly moved trucks and trailers from the United States to Canada, improperly titled vehicles, and engaged in inappropriate accounting practices...These allegations, some of which were made public in a pending lawsuit, along with the Debtors’ financial difficulties and payment defaults, caused certain creditors to take legal action against the Debtors, including noticing defaults, and initiating foreclosure proceedings.”
From Daimler Truck Financial Services:
“KAL Freight delivered Daimler titles for the trailers and made monthly payments on the loan as if it bought and received the equipment...The deals have placed the recovery of about $40 million in Daimler loans in serious doubt.”
What Happens to Drivers?
Reddit user Wasatchbl warns that KAL Freight’s bankruptcy could leave drivers stranded if the company shuts down suddenly. (📸: r/Truckers on Reddit)
The bankruptcy has created anxiety for KAL Freight’s drivers, many of whom are long-haul operators scattered across the country.
In past trucking bankruptcies (e.g. the sudden collapse of Celadon in 2019), drivers were infamously stranded mid-route with fuel cards shut off, unable to get home.
Fearing a similar scenario, stakeholders have been vigilant to prevent chaos if KAL Freight ceases operations abruptly. So far, during the Chapter 11 process, KAL’s trucks have continued to run under DIP financing, meaning drivers are still hauling loads and being paid.
The Bankruptcy Battle
Creditors are now scrambling to recover funds, with two possible outcomes:
A structured liquidation, allowing an orderly shutdown to avoid mass disruptions
Immediate conversion to Chapter 7, risking a chaotic, unplanned collapse
KAL Freight has been forced to appoint independent directors and a Chief Restructuring Officer, a sign that its founders have lost control of the company’s fate.
The Bigger Picture
KAL Freight’s implosion is part of a larger industry shakeout, as high-interest rates, weak freight rates, and overleveraged trucking firms push more carriers to the brink. The fraud allegations, if proven, could tighten lending standards across the sector, making it harder for struggling carriers to stay afloat.
For now, KAL Freight is on borrowed time. Whether it restructures or folds completely, the industry is watching—and so are its unpaid drivers.
🤔 Carrier Considers Sale. Family-owned Gray Transportation is exploring a potential sale amid shutdown rumors. “We’re working with our customers and the buyer,” Company President Darrin Gray told FreightWaves in an interview. The company has over 160 trucks, 500 trailers, and 100 drivers.
📉 Trucking Stocks Decline. Trucking stocks have tumbled recently; however, analysts at Citi view this downturn as an opportunity, seeing it as a sign of market stabilization. However, they warn that weaker consumer spending and sluggish industrial output could delay rate recovery.
❌ Flatbeds Rejections. The first week of March has seen a surge of flatbed tender rejection rates are “off to the moon!” according to Thomas Wasson. As Craig Fuller stated in a response, maybe there are “better options for carriers…”
📊 ArcBest’s TL Freight. To address declining less-than-truckload volumes (down 2% YoY in February and a 9.2% decline in January), ArcBest has increased its truckload freight operations “to better utilize empty capacity and target higher operating income.”
👚 Kohl’s Shares Fall. Kohl’s anticipates a larger-than-expected drop in annual sales, citing weak consumer demand and shifting shopping trends. Quarterly sales fell 9.4%. Ashley Buchanan, Kohl’s CEO, stated that most of the current issues were “self-inflicted” over the past years.
🦜 Bird & Poultry Seizures. Since October, customs officers have conducted 3,768 bird- and poultry-related product seizures across all U.S. borders. 352 fentanyl seizures have been conducted under this same time frame.
🎣 THE FREIGHT CAVIAR CORNER
The FreightCaviar Podcast: We sat down with Aleksander Frelas, Founding Member of Velite.io, a cybersecurity services company. He discusses what sparked his passion for the industry, shares tips on preventing corporate hacks, and more. Catch the episode on YouTube, Spotify, or Apple Podcasts.
Women in Freight. March 8th was International Women's Day, and today, we're showcasing seven female freight Founders/CEOs and the lessons and experiences that have shaped their journeys. Read the article here.
TIA Capital Ideas Conference: FreightCaviar will be in attendance at this year's conference, held April 9-12 in San Antonio. We hope to see you there at the biggest event for brokers. Register now.
‼️ Now Hiring: Chicago-based freight brokerage and technology company Batch Freight is seeking a full-time Customer Sales Rep—learn more and apply here.
I’m Adriana, a writer and editor at FreightCaviar. I’ve covered everything from freight tech to industry lawsuits and market shifts, helping scale us to almost 14K subscribers. My goal: to make logistics stories digestible, clear, and fun to read.
Hello! I'm Jerome FreightCaviar! I’m into the politics of freight and the impact it will have worldwide. I'm always eager to learn more. Follow me on X @JeromeFreightC
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