America's Truckers on the Brink With 221 Bankruptcies This Year

(Bloomberg) -- Justin Stoneman has been in the trucking industry for 27 years, operating out of central Michigan's agricultural heartland. Hauling grain and fertilizer around the Midwest, his 12-odd tractor trailers generated more than $3 million in annual revenue during their best times.

Those days are over. In the past year, Stoneman's business has been squeezed by a range of pressures, from war-fueled spikes in diesel prices to rising insurance costs and onerous debts — all of which have pushed him to the brink. In May, his company, Stoneman Trucking LLC, filed for bankruptcy protection, but he has since lost hope and is shifting to chapter 7, to fully shut down operations.

"I'm so frustrated," Stoneman said. "It's like, what about all this 'Drill, baby, drill'?"

Stoneman isn't alone. At a time when affordability issues are at the center of US voters' concerns heading into next week's midterm elections, America's smaller trucking operators are feeling the pinch. Some 221 trucking companies have filed for bankruptcy so far this year, according to data compiled by Bloomberg, extending a three-year spike at sustained levels not seen in decades.

Around two-thirds of small US carriers — typically operating 20 or fewer tractors, and oftentimes only just one — report that revenue is either flat or down compared with the year-ago period, according to a survey of hundreds of such companies conducted over the past two months by freight-management firm Truckstop and Bloomberg Intelligence. Almost 40% of these operators said that in six months, they expected to be out of trucking or weren't sure where they'd be.

Chip Lane, managing partner at the bankruptcy-focused Lane Law Firm in Texas, said he's seen a "massive uptick" in trucking companies approaching his firm to explore restructuring, sometimes as many as three or four in a week. "They are one of the top businesses that we see over and over and over again."

It's a function in part of the economics of getting in on the ground floor in trucking. Smaller operators typically begin as drivers for larger companies, then foster contacts and a reputation to strike out on their own, said Lane. But many don't have the cash to buy a rig outright and often rely heavily on credit. This makes them more vulnerable than industry leaders like J.B. Hunt Transport Services Inc. to rising costs such as the record diesel prices — even when business is still coming in.