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85% of Startup Carriers Failed During Prolonged Freight Downturn

New motor carriers with independent authority experienced an 85% failure rate over three years amid a grueling freight market contraction, according to Kirk Mann, executive vice president at Mitsubishi HC Capital America. The downturn, lasting roughly three-and-a-half years, devastated small trucking operators who had purchased equipment at inflated valuations.

During 2021 and 2022, used tractors that commanded $34,000 before 2020 peaked at $120,000, leaving carriers deeply underwater when freight rates collapsed. A four-year-old Freightliner Cascadia with minimal mileage exemplified the problem—valued at $45,000 but financed at $100,000 to $110,000.

When defaults mounted, lenders responded by restructuring loans rather than pursuing immediate repossession. Mitsubishi HC Capital restructured 75% of its portfolio through a customer assistance program launched at the onset of COVID-19, with 95% of borrowers resuming payments within 90 days. The current recovery remains uneven, with spot rates firming but fleet balance sheets remaining strained.