European Cargo: grounded by financial pressure and an unforgiving market
European Cargo’s collapse appears to have been driven by a combination of rising operating costs, ...
Source: STG Logistics
By Alex Lennane
STG Logistics filed for Chapter 11 protection yesterday, after a prolonged downturn in the US freight market eroded earnings, tightened liquidity, and left the company with roughly $1.16bn of funded debt, according to court filings.
The company employs some 1,170 people in the US, alongside a broader pool of temporary staff.
In its filing, STG said preserving jobs and maintaining uninterrupted operations was critical to any restructuring, and warned that any disruption to payroll or benefits would cause the business “immediate and irreparable harm”.
STG expanded rapidly during the Covid-era freight boom, when supply chain disruption and strong consumer demand pushed volumes and rates sharply higher. Between 2020 and 2022, the company said revenue increased by more than 60% and, in March 2022, it acquired XPO Logistics’ intermodal business for about $700m to meet demand.
That expansion significantly increased the company’s scale and leverage just as market conditions began to reverse.
Since 2022, STG said, the industry entered what it described as the ‘great freight recession’, marked by excess capacity, falling rates and weaker, unpredictable demand.
Revenues declined in 2023 and 2024 and were projected to fall further last year, while profitability deteriorated sharply, with adjusted EBITDA dropping about 95% year on year in Q2 24.
Rising interest rates, inflation, higher insurance costs, tariff volatility, and regulatory uncertainty added further pressure. STG pursued cost-cutting measures and multiple refinancing efforts, including a major October 2024 transaction that provided more than $300m of additional liquidity.
However, the company said the anticipated market recovery failed to materialise, leaving it unable to support its debt load outside a court-supervised process.
STG said Chapter 11 would allow it to restructure its balance sheet while continuing to operate as a going concern, supported by new debtor-in-possession financing. The company plans either a recapitalisation, that would convert a significant portion of its debt into equity, or a potential sale.
How this differs from Yellow and Convoy
Yellow collapsed after years of operational problems, labour disputes, and repeated liquidity crises that ultimately forced it to cease operations.
Convoy, a venture-backed digital freight brokerage, shut down after failing to reach profitability once freight markets cooled and funding conditions tightened.
STG, by contrast, says its filing reflects excessive leverage built up during an earlier expansion and a prolonged market downturn, rather than a breakdown of its core operations, and that it intends to continue operating through the restructuring.
For more detail on the restructuring, read today’s Loadstar Premium analysis
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