Category: Uncategorized

By David Jencks, Jencks Law, P.C.

Triumph Financial’s factoring segment bought $4.50 billion of receivables in the third quarter, 50.2% more than a year earlier. It bought only 15.5% more invoices to get there. The difference was the size of each bill: Triumph’s average transportation invoice rose 30.8% to $2,210, and the company said it reached $2,288 in the first 16 days of October. Those figures come from Triumph’s 10-Q and shareholder letter, as summarized by Cobalt Intelligence.

That is good news for Triumph’s fee income. It is a warning for anyone who sizes credit on invoice dollars.

Where the extra dollars come from

Much of the increase is fuel. DAT’s national dry van spot rate averaged $3.01 a mile in September, up 96 cents from a year earlier, but 84 cents of that $3.01 was fuel surcharge. Linehaul without fuel was $2.17. EIA’s on-highway diesel average for the week of October 19 was $6.276 a gallon, $2.656 above a year earlier. A carrier billing more per load is often just passing more money to the fuel pump.

Triumph’s CEO, Aaron Graft, said as much in his shareholder letter: dry van revenue per mile is up about 40% from a year ago, while diesel at the pump is up 67% by his measure, and driver wages are reaching 70 cents a mile in many markets. His words: “I am not convinced that current rates have reached a level where the average law-abiding trucking company can earn its true cost of capital.”

Bigger invoices, thinner carriers. That is the combination a lender should notice.

Why this matters for advance rates and limits

Most factoring and asset-based lending structures run on percentages of invoice dollars: an advance rate, a concentration limit per debtor, a credit line per client. When invoices grow 30% on price, all of those limits grow with them automatically. Nobody re-underwrote the carrier. The numbers just got bigger.

On a non-recourse purchase, the factor’s risk sits mostly with the broker or shipper that owes the invoice, and a larger invoice means a larger exposure to that debtor. On recourse deals, the carrier backs the invoice, and the carrier is the party being squeezed by fuel, wages and insurance. Either way, the risk went up with the dollars.

Concentration is the quiet problem. A broker limit set at, say, a fixed dollar amount now covers fewer loads. A limit set as a percentage of a client’s receivables lets a single broker’s dollar exposure rise with every fuel spike.

Legal tidbit: your notice has to work

Under UCC 9-406(a), a debtor who has received a proper notice of assignment can discharge the invoice only by paying the assignee. Bigger invoices raise the cost of a notice fight. Triumph knows that: its 10-Q describes the U.S. Postal Service paying a large carrier directly on invoices Triumph had bought, despite notices of assignment. USPS argued the notices were deficient, and the parties settled in 2025 with USPS paying $47.5 million. Make sure your notices reasonably identify the rights assigned and reach the right place at the debtor.

Legal tidbit: know who already owns the invoices

A factored carrier’s receivables are already sold. If a second lender or revenue-based funder advances against that carrier’s deposits, it is lending against money that belongs to the factor. A UCC search on the carrier, and a look at who sends its deposits, tells you whether you are first or stacked.

What to do now

Underwrite net of fuel. Ask for rate confirmations or settlement statements and separate linehaul from fuel surcharge. Compare the carrier’s linehaul per mile against DAT’s national figure.

Re-set concentration limits in loads as well as dollars, or at least look at both. If a broker’s dollar exposure climbed 30% this year without a credit review, schedule one.

Watch the carrier, not just the debtor. Ask how much of each invoice the carrier actually keeps after fuel and driver pay. A carrier billing $2,200 a load and keeping less than last year is a weaker client than its volume suggests.

Re-verify at renewal. Confirm operating authority and insurance again. Graft writes that regulatory enforcement has taken many drivers off the road, and a client’s roster can change between funding and renewal.

The other side

The fair pushback: higher rates are real revenue. After a long freight recession, carriers needed rates to rise, and Cass reported its truckload linehaul index up 10.1% in September, so this is not all fuel. Triumph’s own book looks healthy: factoring credit loss expense fell to $1.5 million from $2.3 million. Portfolios are performing.

All true, and I’m not predicting a wave of losses. My point is narrower. When invoice dollars rise on cost, the dollars stop measuring what they used to. A credit policy that treats a $2,210 invoice as 30% better collateral than a $1,690 one is reading the wrong number. Lend on what the carrier keeps and what the debtor can pay, and the higher invoices will take care of themselves.

Rate, diesel and Cass figures are from DAT, EIA and Cass as compiled in the Cobalt Intelligence report. This article is general information, not legal advice.

By David Jencks, Jencks Law, P.C.

On October 16, a Dallas County judge affirmed the $604,025,000 jury verdict against C.H. Robinson in Lipe v. Lupus Superior. Add roughly $107 million of prejudgment interest, running at 6.75%, and the number passes $700 million, according to FreightWaves. Most people in freight read that as a safety story or an insurance story. If you finance carriers, read it as a credit story. Your collateral is the broker’s promise to pay.

What changed this year

For about two decades, brokers sued for negligent selection of a carrier argued that federal law (the FAAAA) preempted those state claims. On May 14, the Supreme Court took that defense away in Montgomery v. Caribe Transport II. Liability is not automatic after Montgomery, but the shield is gone.

Lipe goes a step further. The jury found the carrier’s driver was operating “subject to control by C.H. Robinson as to the details of the mission.” Part of the plaintiffs’ theory, as SONAR reported, was the driver’s use of the broker’s own tracking app. If a broker can be held to control a carrier’s driver, the broker’s exposure stops looking like a remote tail risk.

Follow the money to the factor

A factor buys a carrier’s invoice and gets paid by the broker. Everything in that model assumes the broker will be there, solvent, in 30 or 45 days. Three things now press on that assumption.

First, insurance cost. SONAR reports primary broker liability coverage up roughly 40 to 60% on renewal, excess layers up 50% to over 300% in documented cases, and some small brokers going from about $10,000 a year to $30,000 to $40,000. Two underwriters have left the broker auto liability market since May. For a small broker running on thin margins, that is a real hit to cash.

Second, coverage gaps. A broker that can’t buy enough excess coverage is one bad wreck away from a judgment it can’t pay. FreightWaves noted that C.H. Robinson ended the second quarter with $154.9 million in cash, far below the Lipe award, and Robinson is a public, investment-grade company with a $5.8 billion balance sheet. Most of the brokers on your debtor list are not.

Third, consolidation. SONAR counts about 22,000 freight brokers, with the top 100 already holding 84% of the market. Higher insurance costs push the small ones to sell, merge or quit. Some will do it in an orderly way. Some won’t.

Legal tidbit: notice protects the claim, not the payer

Once a broker gets a proper notice of assignment under UCC 9-406(a), it can discharge the invoice only by paying the factor. Pay the carrier instead, and the broker may have to pay twice. That is a strong rule. But it controls who gets paid, not whether there is money to pay with. If a big judgment pushes a broker into bankruptcy, your notice makes you an unsecured creditor with good paperwork, standing in line with the plaintiffs and everyone else.

Legal tidbit: the broker bond is not your backstop

Brokers must keep $75,000 in financial security under 49 U.S.C. 13906 and 49 C.F.R. 387.307. That amount is shared among every claimant when a broker fails. Against a nine-figure verdict, it is a rounding error. Don’t underwrite a broker on the strength of its bond.

What to do on Monday morning

Look at your broker concentration again, with a new question: which of these brokers could survive an uninsured eight- or nine-figure judgment? Ask your larger debtor brokers what their excess limits are and when their policies renew. A broker that can’t renew coverage, or renews with much lower limits, deserves a fresh credit review.

Watch the payment pattern. Days-to-pay that creep from 30 to 50 is often the first sign of cash stress, and it shows up before any filing.

Tighten concentration limits where one small broker carries a large share of a client’s receivables. Spread the risk before the client’s best customer becomes your worst account.

Read your factoring agreement’s recourse terms. If a broker fails, who takes the loss: you or your carrier client? Know the answer before you need it.

And track the appeal. If the control finding stands, brokers will change how they use tracking and carrier-monitoring tools, and that will change what visibility you get on loads.

The other side

The fair pushback: Lipe is not final. C.H. Robinson has said it did not cause or contribute to the accident and an appeal is widely expected. Appellate courts cut or reverse big verdicts regularly. Most broker failures still come from ordinary causes, like thin margins, fraud and bad management, not nuclear verdicts. And if factors overreact by cutting off small brokers wholesale, they choke credit to sound businesses and hurt their own carrier clients, who need those brokers’ loads.

All true. That is why the answer isn’t to stop factoring small-broker invoices. It is to price and limit the risk honestly. The legal ground under brokers moved this year, and it is still moving. A credit policy written for the old ground is out of date, whatever happens on appeal.

This article is general information, not legal advice.

October has brought a run of developments that matter to Factors, Brokers, and Carriers. A Texas court upheld a $604 million verdict against a major Broker. Two of the largest Brokers are fighting a novel RICO suit. And bankruptcy courts are letting struggling Carriers keep factoring after they file.

A $604 million verdict stands against C.H. Robinson

On October 16, a Dallas County judge upheld the $604 million jury verdict against C.H. Robinson in Lipe v. Lupus Superior and added about $107 million in prejudgment interest. The jury found the driver was under C.H. Robinson’s control, which made the Broker vicariously liable for the crash. It is the first major Broker judgment since the Supreme Court’s Montgomery decision, and C.H. Robinson has said it will appeal. For Brokers, the message is that how much control you exercise over a load can matter as much as which authority you hold.

The Fifth Circuit reconsiders double-brokering liability

The full Fifth Circuit is rehearing Crane v. Penske. In August, a three-judge panel held that the originating Carrier can be the “statutory employer” of a driver two steps down a double-brokered chain. Briefing is complete, and trucking industry groups have filed amicus briefs supporting Penske. A decision could reshape liability up and down the subcontracting chain.

Carriers sue C.H. Robinson and TQL under RICO

In Stevens Trucking v. C.H. Robinson and TQL (E.D. Tex.), six Carriers allege that the Brokers knowingly use “chameleon carriers” to undercut legitimate rates. On October 19, TQL moved to dismiss. It argues the Carriers can’t show the direct injury RICO requires, that FMCSA and ELD violations aren’t RICO predicate acts, and that the Lanham Act claims fail. TQL also relies on the forum clause in its broker-carrier agreement, which points to Clermont County, Ohio. C.H. Robinson’s answer is due November 30. Watch this case to see whether forum clauses in broker-carrier agreements hold up.

Factoring keeps Carriers moving through bankruptcy

Three Subchapter V trucking cases now ask bankruptcy courts to approve factoring after the filing:

• Globemaster Inc. (Bankr. N.D. Ill.), a 51-truck Carrier whose prepetition Factor is Saint John Capital. The court has granted interim relief, and the factoring and cash-collateral hearing is set for October 27.
• Xoco Transport (Bankr. S.D. Tex.), which is factoring with RTS Financial. An interim order approved factoring, granted adequate protection, and lifted the stay as needed. The court entered further orders after its October 16 hearing.
• Truckload, LLC (Bankr. M.D. Fla.), which filed an emergency motion on October 19 to approve factoring effective as of the petition date. It was set to be heard on October 21.

For Factors, these cases share three practical lessons. Know whether your agreement will be treated as a true sale or a loan. Make sure your UCC-1 is filed in the client’s state of organization. And be ready to negotiate replacement liens and adequate protection in the first two weeks of a case, not at plan confirmation. Subchapter V moves fast.

Capacity keeps tightening

FMCSA continues to crack down on CDL schools and Carrier fraud. In the week of October 12, 1,064 operating authorities went inactive and 2,101 Carriers lost liability insurance coverage. Another 153 Carriers changed their phone, email, and address on the same day, a common sign of identity theft. FMCSA has also shut down about 10,000 CDL school sites and is seeking emergency authority to screen “chameleon” schools that re-register under new names. Factors should keep verifying Carrier identity before funding.

This article is for general information only and is not legal advice. For guidance on a specific matter, contact Jencks Law, P.C.