Digital freight broker Next Trucking and sister trucking company Next Freight Solutions are on the brink of closure after furloughing most of their remaining employees and drivers in Long Beach, California, and they have effectively ceased operations as executives scramble for last-minute funding to keep the company afloat, according to multiple sources familiar with the situation.
Approximately 18 of Next Trucking’s 28 remaining workers were notified on Sept. 19 that they were being furloughed the next day until further notice “because of the current level of work available,” according to a letter sent to the affected employees and obtained by FreightWaves. “We are hopeful that we will be able to restore you to your prior position with our company. However, it is important to note that we reserve the right to change this date based on our business needs.”
No date was included in the letter about when or if furloughed workers would possibly return to work.
While Next executives blamed the furloughs on the economic slowdown that has crippled the freight industry and forced brokerages and trucking companies of all sizes to cease operations, some current and former employees say that wasn’t the cause. They claim greed was the main reason the entities lost two key customers, Amazon and Tesla, over the past few months after multiple carriers that hauled loads for these accounts alleged that Next hadn’t forwarded payments to them for months for loads they hauled.
In interviews with some former Next Trucking employees, who spoke with FreightWaves on the condition of anonymity, they said the company owes tens of millions of dollars to vendors as well as to countless intermodal carriers that moved loads in and out of the ports of Los Angeles and Long Beach.
One source said the death knell for the company was when Next was expecting a multimillion-dollar payment from Tesla in July, which was then supposed to be forwarded to the carriers. It didn’t happen after carriers reached out to Tesla directly and forwarded the information pertaining to the loads they had hauled and hadn’t been paid for.
“Tesla owed us about $3.5 million and a top Next executive for whatever reason went ahead and shared our account information about how much we owe to everybody,” a former Next employee, who didn’t want to be named for fear of retaliation, told FreightWaves. “And so, Tesla took a step back and said we’re going to go ahead and make all those payments [to carriers] on your behalf, which turned things in a bad direction for us, but it’s the right thing to do.”
A representative for Tesla did not return FreightWaves’ request seeking comment.
Another source estimated that independent carriers that hauled Amazon loads are owed over $2 million. He claims that Amazon forwarded the payments to Next, but the money wasn’t dispersed to pay the intermodal carriers.
“I’m not sure how many carriers we owe, but I know several that hauled Amazon loads were among those that protested in our lobby every few weeks,” the source, who did not want to be identified, told FreightWaves. “We felt so bad for them. It was all empty promises. Some told us they took out second mortgages on their houses to pay their drivers.”
In February, digital brokerage Next Trucking merged with its FreightTech competitor, Chicago-based CDL1000, which was founded by Andrew Sobko, and a third entity, Hickory Transportation Services (HTS) of Jacksonville, Florida, in an equity deal financed by Brookfield Growth and Mucker Capital. Next Trucking continued to operate under its own name.
Sobko did not respond to FreightWaves’ request seeking comment. Neither did representatives for Brookfield Growth and Mucker Capital.
Prior to the merger, Next Trucking once had around 200 employees. That number has dwindled to fewer than a dozen, a source familiar with the situation told FreightWaves.
“I don’t think that Next Trucking will be here for more than another 30 days,” the source, who did not want to be named for fear of retaliation, said. “It’s not a great situation. We put everybody on furlough and forced them to take PTO [paid time off] because we have no money. We have people we let go over a month ago that we owe PTO and money to that we haven’t paid. It’s so sad. We have had a reduction in force just about every three months for a while now, and it’s sad that we’ve lost so many people.”
The company’s remaining assets, including tractors, trailers and chassis were repossessed as of last week, the source said. Next’s executive team hasn’t paid its $34,000-per-month rent since February or for parking since that time.
“I know prior to the merger, Next Trucking was struggling after COVID, but the previous owners’ goal was to take care of the carriers. Once CDL1000 came on board, they truly did not care.”
While Next Freight Solutions once had around 86 trucks, the number dwindled to about eight power units and 12 drivers in May. In late August, a source said, a member of Next’s executive team, whom he declined to name, asked a former employee to change the intermodal carrier’s MCS-150 form on the Federal Motor Carrier Safety Administration’s website to show the company had 153 drivers and the same number of power units in an effort to possibly land a big contract with a national home improvement chain less than a week before Next’s insurance was slated to be revoked.
The beginning of the end?
Prior to the merger of the companies, Sobko left a trail of unpaid carriers, employees and legal challenges while at the helm of CDL1000, according to former CDL1000 employees who worked for him. While Sobko said most of the carriers had been paid before the new entities joined forces, Next Trucking and HTS employees, who had briefly met Sobko, claim they were bombarded with collections calls from unpaid carriers and vendors looking for him.
While the Next entities haven’t officially ceased operations, Next Freight Solutions’ operating authority was involuntarily revoked on Sept. 3., according to the FMCSA’s SAFER website. The drayage carrier’s Bodily Injury Property Damage Coverage (BIPD) insurance was canceled on Aug. 26.
A check on SAFER shows that Next Freight’s broker authority is active and has the required minimum of $75,000 in its trust fund on file with the regulatory agency.
According to the Intermodal Association of North America (IANA) website, Next Freight has been suspended for failing to follow the rules of the Uniform Intermodal Interchange and Facilities Access Agreement (UIIA), an equipment interchange agreement between intermodal carriers and equipment providers, including steamship lines and railroad and equipment leasing companies. Sources say Next Trucking owes FlexiVan, Milestone Trailer Leasing and Direct ChassisLink Leasing nearly $10 million.
Next’s Standard Carrier Alpha Code (SCAC) is also suspended. The SCAC is required to operate at the ports, because its operating authority was involuntarily revoked by the FMCSA.
Instead, a source said Next is moving its remaining freight using two outside intermodal carriers. However, both companies have prepayment agreements in place before moving Next’s brokered loads.
“I don’t see a path forward for Next Trucking,” the source said. “We’re moving loads with these carriers, and looking at the numbers, we’re losing money on every load. But, instead of addressing the situation to make money on the loads, the conversation is that we just need more volume.”
Knowing that Next couldn’t pay its employees or carriers, a source familiar with the situation claims top executives were pushing for the remaining employees to source more carriers to haul its remaining brokered freight.
Prior to the merger, Sobko abruptly laid off most of CDL1000’s workforce amid mounting legal challenges, some of which are ongoing, after he allegedly failed to pay carriers, former employees and vendors.
When FreightWaves interviewed Sobko in March, nearly a month after the merger with Next and HTS was announced, he declined to address questions about pending lawsuits filed by carriers claiming he and CDL1000 owed them millions of dollars.
Instead, Sobko said the newly formed entities were focusing on “future growth of the business.”
“Based on what I know, most of the carriers have been taken care of and we made sure we implemented the proper systems to make sure all potential issues that could arise in the future are immediately taken care of,” Sobko told FreightWaves in an exclusive interview.
Some former CDL1000, Next Trucking and HTS employees disagree.
Once the merger was announced, HTS employees who formerly worked in its Jacksonville office started receiving multiple calls every day for months from former employees and carriers seeking payment from CDL1000.
“After the announcement was made, there were ex-CDL employees and some carriers that were calling Hickory, asking to speak with Andrew about their pay. He was in our office at the time and one person in our office put the call on speakerphone while Andrew was there so he could hear it. I don’t know if he ever called the person back, but the person sounded desperate,” the ex-HTS employee told FreightWaves. “It was a red flag for many of us, for sure, and several of us left. We grew tired of getting these phone calls about Andrew and CDL1000 that had nothing to do with us.”
As of publication on Thursday, HTS Logistics’ two surety bonds through Jet Insurance Co. and Southwest Marine and General Insurance Co. for $75,000 apiece were slated to be canceled in October. However, Hickory Transportation Services’ common carrier authority is active as well as its BIPD insurance, according to FMCSA.
Mark Tanner, CFO of HTS Logistics, did not return FreightWaves’ telephone calls or emails prior to publishing.
Unanswered protests
Soon after CDL1000 merged with the Next entities in Long Beach, small intermodal carriers that hauled Amazon and Tesla loads started showing up in the lobby of Next’s office building, demanding to be paid. Although Sobko and John Ohle, who was named president of Next Trucking about a month after the merger, were intermittently at the Long Beach office, ex-employees said they refused to meet with carrier owners and instead sent security or lower-level staff to speak with them. Some were owed hundreds of thousands of dollars in unpaid invoices, while one carrier was owed over $1 million, according to a source who worked in the office when carriers protested at the company’s headquarters in Long Beach.
“One company owner came to the lobby and asked for payment and told me that they had to give away three of their personal vehicles to their intermodal drivers because they couldn’t make payroll,” the source said. “That broke my heart.”
The deal
Mark Goodacre, owner of American Freightways of San Diego, hauled over $300,000 worth of Tesla loads brokered through Next Trucking but claims he was forced to take desperate measures when he wasn’t being paid by the brokerage. Sources at Next Trucking confirmed that American Freighways was one of the carriers that moved its freight.
Goodacre claims that despite repeated text messages and emails from Sobko and Ohle allegedly claiming Tesla would be paying his company within a week or two after initially blaming the payment glitches on Tesla, most of the funds never arrived.
In a last-ditch effort to recoup his money, Goodacre drafted a settlement agreement, which Sobko signed, among Next Trucking, CDL1000, HTS and American Freightways, which also listed Sobko as a personal guarantee if the payments weren’t made. Part of the agreement, which was obtained by FreightWaves, was that if Sobko defaulted on Next’s payments from Tesla to American Freightways, Tesla would also be added to Goodacre’s collections efforts and Tesla could potentially be paying its freight bills twice.
After initially receiving two wired payments from Next Trucking, CDL1000 and HTS accounts for around $122,000, the entities failed to fulfill their remaining payment obligations for around $178,000 in July, according to Goodacre. That’s when Goodacre said he notified Tesla representatives of the payment arrangement that he had reached with Sobko and claims that’s when the payments from Tesla to Next Trucking stopped.
“There was always an excuse from Andrew that Next was waiting on a payment from Tesla or that Andrew’s investors were trying to resolve the payment issue or that a big funding deal was in the works, but it never happened,” Goodacre told FreightWaves. “My drivers have been paid but there are over 20 carriers that are still owed by Next and are on the brink of closing or have closed.”
A promised cash infusion
Former and current employees claim Sobko and other executives had been promising a significant cash infusion to keep Next afloat since April, including one touted as around $14 million, but it didn’t happen.
“At first, we believed that Andrew was going to have some great news to share soon. He was slowly forcing us to believe that there’s something worth looking forward to, but not anymore,” the source said. “I watched too many great people that have really put everything they had into this company get failed by the organization and I feel horrible for that.”
In late March, Sobko introduced Ohle as the new president of Next Trucking and HTS as the two visited the companies’ operations in Long Beach, Chicago and Jacksonville.
However, a week later, news broke that Ohle, who had bought a formerly family-owned less-than-truckload carrier and freight brokerage, Tony’s Express of Fontana, California, a year earlier in March 2023, abruptly closed operations, laying off over 200 truck drivers, warehouse workers and office personnel via a text message around the same time that he accepted the new position at Next and HTS.
“Our jaws dropped when we read what Ohle had done at Tony’s, and this wasn’t his first time coming into a company and later closing the doors, leaving employees and drivers unpaid,” a source told FreightWaves. “That was a red flag for sure, but we were told to keep an open mind and to give him a chance.”
In June, Tony’s Express filed for Chapter 11 bankruptcy protection. At that time, Ohle was seeking to reorganize and start a rental truck trailer business. However, on Sept. 17, he filed a motion seeking to dismiss the Chapter 11 bankruptcy and convert it into a Chapter 7. That hearing is scheduled for Oct. 29.
Ohle didn’t not respond to FreightWaves’ request seeking comment.
New business venture
Despite the dire financial situation at Next, Sobko and his executive team have launched a new business enterprise called Batch Freight, which is touted as the parent company of the three entities.
According to its website, it is the “combination of leading freight technology and professional logistics services from across CDL1000, NEXT Trucking, and Hickory Transportation Services.”
The site stated that it moved $30 billion in cargo, completed 85,000-plus truckload shipments and over 200,000 container shipments in 2023.
“I think Batch Freight is another effort to try to separate a little bit from some of the damaging information that’s out there now about Next, CDL1000 and HTS, which was a good company that has been dragged into this,” a source familiar with the new business venture told FreightWaves. “I would do my homework and demand to be paid up front before I worked with this company or any of the other entities Andrew Sobko controls.”
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