U.S. Postal Contractor Cuts 660 Jobs

Matheson Flight Extenders (MFE), a U.S. Postal Service contractor, operating 44 mail sorting and terminal handling services across the country, this week, filed paperwork which stated that the company plans to reduce no fewer than 660 jobs at two of the company’s facilities in Atlanta and Brandywine, Maryland, by October 15, 2023.

In a FreightWaves publication, the company will eliminate 335 jobs in Atlanta and 327 in Brandywine, according to MFE’s Worker Adjustment and Retraining Notification Act (WARN) notices filed in Georgia and Maryland on Wednesday. 

According to the report, WARN notices are required under federal law for companies to provide employees 60 days’ notice of a possible plant closure or mass layoff. 

In the WARN letter, MFE cites “mass layoff, no recall” as the reason for the permanent layoffs of its forklift operators, maintenance and material handlers, supervisors and managers at the two locations.

Given an account of the past, Matheson Postal Services are wholly owned subsidiaries of Matheson Trucking, headquartered in Sacramento, California, whereas the family-owned entities, founded by Robert and Carole Matheson in 1962, filed for Chapter 11 bankruptcy in May 2022.

Furthermore, one month after the bare-bones petition was filed, it was reported that attorneys for the Postal Service alleged in court filings that the Matheson entities filing for bankruptcy was about “renegotiating their contracts” with the government agency.

Meanwhile, at the time of its bankruptcy filing, the Postal Service explained that the Matheson companies had 54 mail contracts. MFE was associated with 44 of the contracts with the Postal Service.

In a further verdict, the report also stated, according to court filings, that MFE operates 38 small to midsize facilities that “act as an interface between air and truck transport of mail and packages, referred to as terminal handling services.”

However, no fewer than two sticking points in court filings between MFE and the Postal Service were over the two STC facilities in Atlanta and Brandywine that were hit with WARN notices of permanent layoffs this week. 

According to court documents, “MFE has stated that it currently estimates it has incurred reimbursable costs from the [Postal Service] of approximately $24 million’ associated with the Atlanta, Georgia, and Brandywine, Maryland STC facilities.”

Taking a recap of the past incident, on May 16, FreightWaves publication stated that a California-based trucking and logistics company, which contracts with the U.S. Postal Service to haul the mail, filed for Chapter 11 bankruptcy.

According to an in-depth report by FrightWaves, the family-owned Matheson Postal Services Inc. of Sacr, I filed its petition in the U.S. Bankruptcy Court for the Eastern District of California on May 5. The company’s terminal handling services division, Matheson Flight Extenders, also filed for bankruptcy protection on the same day.

However, as of publication, Matheson’s attorney, Gregory Nuti, could not respond to FreightWaves’ request seeking comment.

It was reported that the filing lists both its assets and liabilities as between $10 million and $50 million. 

Meanwhile, the 60-year-old trucking and logistics company clearly stated that it has up to 5,000 creditors while maintaining that funds will be available for distribution to unsecured creditors once it pays administrative fees.

It was learned that the company, which was founded by Robert and Carole Matheson in 1962, is a transportation and logistics provider for the Postal Service and other commercial carriers. In contrast, the trucking company has 248 power units and 383 truck drivers, according to the Federal Motor Carrier Safety Administration’s SAFER database.

Furthermore, in November, Matheson filed an appeal with the Postal Service Board of Contract Appeals (PSBCA). As of publication, a Postal Service spokesperson had not responded to FreightWaves’ request for comment about the company’s appeal.

Recently, Rooney Trucking, headquartered in Polo, Missouri, which also contracted with the Postal Service to haul mail, filed an appeal with the PSBCA. That family-owned carrier, which had 37 drivers and 66 power units, ceased operations and filed for Chapter 7 bankruptcy.

Some mail contractors have struggled to stay afloat since the Postal Service announced revamping its $6.6 billion contract program with private trucking fleets in 2019. The program, known as Dynamic Route Optimization, changed the way private carriers were paid — switching from contract rates to paying trucking companies on a mileage basis. This led to consolidation among mail-hauling companies that could service a larger region and squeezed out some of the smaller private contractors in the industry.

Matheson’s largest unsecured creditor is Porter Freight Funding of Birmingham, Alabama, formerly known as Porter Billing Services, owed more than $1.4 million. The filing also lists that Comdata Mastercard Program of Covington, Louisiana, owed more than $162,000, and Penske Truck Leasing of Philadelphia owed more than $156,000. 

In continuation, Muguet Cocharan, chief people officer of Matheson Inc., declined to comment on the permanent layoffs at the two facilities and if more layoffs are expected, as of FreightWaves’ publications.