Pride Group Collapse: How Pride's Fall Could Impact Freight Industry

Pride Group's closure could have a impact on the industry. There were plans to help aid the company's revival, but stake holders rejected the plan. Here some of the key points in this developing situation:

• Pride Group, Canada's major trucking firm, to cease operations
• Owes lenders $637 million, stakeholders rejected a $56M rescue plan
• Controlled over 20,000 trucks in Canada and U.S.

Impact on Freight Rates

Pride Group's demise could ripple through the industry. Mike Millian, president of the Private Motor Truck Council of Canada, notes:

"The wind down of operations should place some upward pressure on freight rates, however the level of that increase is hard to quantify, as we are still in a depressed, if not slightly improving cycle"

Why? Pride Group was known for aggressive rate bidding. Their exit might help rates recover.

However, supply chain professor Jason Miller is not convinced, stating in a comment on LinkedIn:

"...there is no recorded instance of capacity exit causing a sustained increase in pricing."

Driver Market Shift

With 1,068 trucks still running and 900+ employees, Pride's closure will inevitably create a wrinkle in the job market. Millian hopes:

"Drivers who will lose their jobs... will land on their feet in some of the many well run trucking companies that are out there."

What Went Wrong?

• Pandemic led to capacity glut and low freight rates
• Over 20 lenders filed claims totaling $637 million
• Major creditors: Daimler Truck Financial Canada ($193M), Mitsubishi Capital ($88.3M)

What's Next?

Pride seeks new financing to operate through September 8. According to court documents, Pride Group continues to operate 1,068 trucks. The company currently retains over 900 employees and contractors, including both drivers and office personnel.

Stakeholders recently rejected a $56 million offer from members of the Johal family, the founders and former operators of Pride Group, to reacquire the company. The company's assets will likely be broken up to pay creditors.

"Given the feedback... the monitor no longer views a restructuring plan as a feasible option," stated Ernst & Young in their report.

Source: Freight Waves | LinkedIn