Trucking Bankruptcies Accelerate as Tariffs and Debt Pressure Mount

Bankruptcies among trucking companies are climbing at a faster pace, as thin margins collide with tariffs, debt loads, and higher operating costs. The wave of failures underscores how post-pandemic overexpansion has left fleets vulnerable to today’s weaker freight market.

Rising Bankruptcy Filings

According to data from BankruptcyData, more than 370 transportation and logistics companies have filed for bankruptcy over the past five years, with 41% occurring in just the last two years. Many of these were small- to mid-sized fleets with liabilities under $10 million, though large operators have been affected as well.

Yellow Corp.’s collapse in 2023, which eliminated 30,000 jobs, remains one of the most significant mass layoffs in U.S. transportation history.

Michael H. Belzer, professor of transportation economics at Wayne State University, said the cycle reflects trucking’s structural challenges.

“The canary in this coal mine is trucking, which runs on the narrowest margins and is notoriously structured to cannibalize itself to survive, until it fails.”

Overinvestment and Debt Loads

The pandemic-era freight boom drew thousands of new entrants to the market, many of whom invested heavily in trucks and drivers based on unsustainably high spot rates. As freight demand cooled, those investments became a liability.

Daniel Alpert of Westwood Capital explained:

“A business is overindebted, having difficulty paying its creditors, trying to make a marginal profit on the next order, and finding it difficult to do so. Having a very expensive truck inventory costs a lot of money to keep up with.”

Attorneys working in the sector note that companies are increasingly relying on merchant cash advances, short-term, sales-linked financing products with little transparency.

• These advances often carry APR levels of 50% to 300%, according to Louis Caditz-Peck of the Responsible Business Lending Coalition.
• Small carriers unable to access traditional loans have turned to these products, accelerating financial strain.
• Many companies are seeking protection under Subchapter V of Chapter 11 to restructure debts and cut down creditor claims.

Tariffs Add Pressure

Trump administration tariffs are compounding the stress, particularly by discouraging investment in new equipment and expansion.

Jason Miller, a professor at Michigan State University, warned that tariff uncertainty has delayed recovery:

“At this point for the trucking sector, I’ve completely ruled out a market recovery in 2025. In an optimistic scenario, the earliest meaningful recovery could take place in the second quarter of 2026.”

Immigration policy is another potential risk. Noel Perry, a transportation economist, said driver availability could tighten further if deportations expand:

“If Trump’s program to disqualify these people and deport them is successful, there will be a shortage of drivers.”

Why Pandemic-Era Entrants Struggle Most

Despite record profitability in 2022, many companies launched during the pandemic, dubbed the “Covid kids”, failed to build resilience.

• These fleets overpaid for equipment at inflated market values.
• They lacked the experience or financial buffers to survive in a downturn.
• Competition from digital players like Uber Freight added further pressure, offering cheaper alternatives to traditional carriers.

Bankruptcy attorney Joseph Pack noted how the downturn left companies in a holding pattern:

“The bankruptcy filing kept the company alive for several months, giving it a chance to see if spot rates would rebound. Had they done so, even just a little, the company was positioned to thrive.”

Source: Bloomberg Law