{"id":39206,"date":"2025-11-05T14:15:12","date_gmt":"2025-11-05T14:15:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/39206\/"},"modified":"2025-11-05T14:15:12","modified_gmt":"2025-11-05T14:15:12","slug":"trucking-bankruptcies-plague-california-floor-covering-news","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/39206\/","title":{"rendered":"Trucking bankruptcies plague California – Floor Covering News"},"content":{"rendered":"

\"\"Kal Freight filed for Chapter 11 bankruptcy amid accusations of massive fraud involving phantom sales and ghost trailers.<\/p>\n

A wave of bankruptcies among California trucking companies has resulted from a combination of the state\u2019s AB5 law reclassifying independent contractors and a broader economic downturn in the freight market. While the law is often cited as a key factor, other challenges\u2014including low freight rates and operational issues\u2014have also driven companies out of business.<\/p>\n

The impact of AB5<\/p>\n

California\u2019s Assembly Bill 5 (AB5<\/a>) mandates a strict \u201cABC test\u201d for determining worker classification. The law reclassifies most truck owner-operators, who typically work as independent contractors, as employees.<\/p>\n

The \u201cB\u201d prong: The law\u2019s \u201cB\u201d prong is particularly challenging for the trucking industry, as it requires a worker to perform duties \u201coutside the usual course of the hiring entity\u2019s business\u201d to be an independent contractor. Since driving is the core business of a trucking company, most owner-operators cannot meet this requirement.
\nIncreased costs: The reclassification requires companies to provide benefits, overtime, workers\u2019 compensation insurance and payroll taxes, significantly increasing their operational costs.
\nLegal challenges: The California Trucking Association filed numerous legal challenges against AB5, but the Supreme Court declined to hear the case in 2022, allowing enforcement to proceed.
\nKal Freight Inc. (2024): A large California trucking company, Kal Freight filed for Chapter 11 bankruptcy in December 2024 amid accusations of massive fraud involving phantom sales and ghost trailers, causing financial distress.
\nMiranda Logistics Enterprise Inc. (2025): This family-owned company and its affiliate, Grit & Gravel Inc., filed for Chapter 11 in January 2025. They cited cash flow problems caused by a defaulted factoring agreement.
\nCentral California Cartage Co. Inc. (2024): The company filed for Chapter 7 liquidation in March 2024 after its operating authority was revoked. It had significant debt and posted sharply lower revenue in 2023.
\nWise Choice Trans. Corp. (2024): This 3PL filed for Chapter 7 liquidation in January 2024. The company experienced declining revenue, and its insurance was canceled.
\nFlex Intermodal Inc. (2024): The company filed for Chapter 7 liquidation in February 2025, more than a year after it ceased operations. It owed money to several leasing companies and government entities.
\nStarship Logistics LLC (2024): Based near the Port of Long Beach, this logistics company filed for Chapter 11 in November 2024 after losing its largest customer and facing lawsuits.<\/p>\n

A struggling national market<\/p>\n

Bankruptcies extend beyond California. The state\u2019s strict labor law has exacerbated financial issues during a broader \u201cGreat Freight Recession\u201d that has caused dozens of companies to fail nationwide, not just in California.<\/p>\n

Industry-wide conditions: Contributing factors include a market glut of trucking capacity, low freight rates and a decrease in shipping demand.<\/p>\n

Not all bad news<\/p>\n

Despite the bankruptcies, larger distributors such as Tri-West in Santa Fe Springs, Calif., have remained unaffected, said Dave White, president. \u201cWe weren\u2019t sure how these changes were going to affect us,\u201d he said. \u201cWe have our own fleet of delivery and transfer trucks, and the freight forwarders we use when moving product are larger and well established.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Kal Freight filed for Chapter 11 bankruptcy amid accusations of massive fraud involving phantom sales and ghost trailers.…\n","protected":false},"author":2,"featured_media":39207,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[26946,14026,7,9,8,26947,845,4586,23571,26948],"class_list":["post-39206","post","type-post","status-publish","format-standard","has-post-thumbnail","category-california","tag-ab5","tag-bankruptcy","tag-california","tag-california-headlines","tag-california-news","tag-california-trucking-association","tag-labor","tag-shipping","tag-supply-chain","tag-trucker"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/39206","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=39206"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/39206\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/39207"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=39206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=39206"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=39206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}