Central Freight Lines Lays Off 100 Workers in Phoenix | Phoenix New Times


Dock the Hauls! Trucking Giant Lays off Dozens Before Christmas in Phoenix

Order gifts from Amazon? Your package won’t be delivered by the Phoenix courier that laid off its entire staff days before Christmas.
Central Freight Lines operates a stone's throw from its former customer, Amazon, in west Phoenix. Central Freight announced suddenly last week it would be closed by New Year's Eve.
Central Freight Lines operates a stone's throw from its former customer, Amazon, in west Phoenix. Central Freight announced suddenly last week it would be closed by New Year's Eve. Elias Weiss
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A year ago, truckers for Central Freight Lines' Phoenix hub were delivering presents, but last week the company kicked them and any holiday cheer out of the cab, as it announced it could no longer stay in business.

The less-than-truckload carrier, which transported cargo sized between parcels and full truckloads, axed 100 jobs at its plant in Phoenix after 96 years in operation.

The company's downfall may be blamed on one of its former major customers, which is contracting with truckers across the globe to deliver Christmas presents this week — Amazon.

"The company explored all available options to keep operations going," said Bruce Kalem, president of Central Freight Lines in a statement. "Despite diligent efforts, the company was unable to gain commitments to fund ongoing operations."

Central Freight Lines told the Arizona Department of Economic Security in a mass layoff notice that it wouldn't shutter operations until New Year's Eve. But the company fell apart more quickly than that.

Employees have been locked out of buildings, the company's website is gone with a final message about the closure, and all the phones are disconnected.

This was done "with a heavy heart and extreme regret," Kalem said.

Jim Lange, a veteran in the trucking industry, was pumped to start his new job at Waco, Texas-based Central Freight Lines in April at the Phoenix office.

Lange didn't expect to have to switch jobs before the end of the year — neither did 99 of his coworkers.

Central Freight Lines, which ran a hub near 59th Avenue and Buckeye Road in Phoenix, delivered the bad news to nearly 2,100 workers last week. Merry Christmas.

The company's demise is “a tragedy on many levels,” Lange said.

In a bitter irony, layoffs nationwide were at a 29-year low several weeks ago, according to the U.S. Department of Labor.

Transportation rebounded as an industry, in metro Phoenix, the region gained 100 trucking jobs last month and added 1,100 since last year, according to the Arizona Commerce Authority. That's a 5.8 percent increase.

Massive stimulus packages with federal aid for both companies and workers alike should have bailed out companies like Central Freight Lines, which was awarded $10 million in COVID-relief in the form of paycheck protection money to keep layoffs from happening during the pandemic. But that money dried up within months.

None of the affected workers were represented by a union.

The news came “by surprise and at an unfortunate time of the year,” said Lange, who was the director of linehaul operations at the company's Phoenix hub.

Lange was quick to find another job. Dozens of other ex-staffers aren’t so lucky.

The company hails from Texas but its CEO Jerry Moyes is a well-known Arizona executive.

Moyes still has a home in Glendale, public records show.

He founded Phoenix-based Swift Transportation, a major trucking business, and charter airline Swift Air at Phoenix Sky Harbor. He’s also a partner in the Arizona Diamondbacks and was a partial owner of both the Phoenix Suns and then-Phoenix Coyotes.

Moyes spent a great deal of his own money in an effort to save the company, Lange said.

It just wasn’t enough.

“I know that he took this path with great embarrassment professionally, as well as personal regret for putting the drivers and office staff out of work,” Lange said.

For now, the company's $13 million 59th Avenue property, which Moyes owns, has not yet been listed on the market.

“I think that it was more of a management problem,” said Jorge De León, who worked for CFL in 2001 in Phoenix. 

He, too, was laid off in a previous round.

“It was a great company at the time,” he said. “My memories there were amazing.”

But just a few weeks ago, De León heard rumors that the company was swimming in debt. Turns out, he was right.

“CFL is shutting down its operations due to unprecedented financial distress, including loss of significant revenue,” said Cheryl Wallace, vice president of human resources risk management and safety at the company in a letter to the state.

Amazon was a major customer for the business which accounted for roughly 30% of its revenue, the company's president told a trade publication.

"They became a major part of us and that was our fault really to have all of our eggs in one basket. We never really recovered from that loss," Kalem said.

In July, an appeals court tossed out a multi-million award Central Freight won in a lawsuit against Amazon.

Back in 2017, Central Freight sued Amazon, one of its customers, and claimed the online retailer breached its contract among other complaints. 

Central Freight had a deal with Amazon distribution centers in Phoenix, Goodyear, Buckeye and Casa Grande, a contract in 2019 shows.

The company accused Amazon of charging millions of dollars in fees "without contractual authority" and that it used its "economic power and dominance" to coerce the trucking business into unfair contract terms.

Amazon argued that its contract with CFL was never formalized, so it couldn't be breached.

The courts ultimately agreed.

CFL won the federal jury trial early this year — but the $2.5 million verdict was later thrown out by an appeals court judge.

On December 14, Aaron Cox, a spurned employee who was laid off last week, sued his former employer in district court.

Cox alleges he was not provided the 60-day notice of possible termination as required by federal law, according to court documents.

In his complaint, he also claims the company failed to make 401(k) contributions, neglected to provide health insurance coverage, and tossed out bonuses and accrued vacation pay that was promised to him.

Neither Kalem and Moyes responded to Phoenix New Times questions about worker complaints.

Central Freight is in negotiations to sell most of its equipment and is doing its best to help ex-workers find new jobs in the Phoenix area, according to a statement from the business. 
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