Covenant Transportation Group Inc. of Chattanooga, Tennessee, said it would close its Southern Refrigerated Transport terminal in Texarkana starting on May 1.
The closure, the company said, would cost approximately 150 jobs at the plant. Covenant CEO David Parker said those employees will be offered severance packages and health care insurance support.
Driver positions will be transferred to Chattanooga or Greeneville, Tennessee, Parker said. The Texarkana facility is the main hub of Covenant’s solo-driven refrigerated service, which Parker said would continue to be provided from the other locations.
“This action, while regrettable and extremely painful to many in our enterprise and especially to those directly impacted, is necessary to focus our staffing and capital towards our targeted business units and to lower overhead costs,” Parker said in a news release. “The enterprise has detailed plans in place with the objective of continuing to deliver outstanding service for our customers and support our professional driving force from these locations.”
SRT is a segment within Covenant’s Highway Services division. In fiscal 2019, Covenant said it operated 390 tractors in its over-the-road (OTR) service, which struggled financially.
The company reported OTR revenue of $93.8 million for the year, down from $152.1 million in 2018. Operating income for OTR was a negative $11.7 million, a significant decrease from a profit of $6.8 million the previous year.
“However, OTR operations deteriorated materially, primarily as a result of our solo-driver refrigerated operations, and generated a significant negative margin,” the company said in a March filing with the U.S. Securities & Exchange Commission.
The news release announcing the closure did not mention the COVID-19 pandemic as a contributing cause of the action. In March, Covenant announced its executive leadership team and board of directors would take a 10% to 15% reduction in annual salary or retainer because of the financial crunch of the pandemic.
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