Transportation Minute: Observations and Trends in Transportation Finance - Q3 2025
Written By: David Jencks, Esq., Jencks Law, P.C.
Authored by David Jencks, Esq., The Transportation Minute delivers quarterly updates and observations from the ever-changing landscape of transportation factoring. This column aims to keep you informed and ahead of the curve.
This quarter, we spotlight two continuing trends affecting Factors and Carriers, followed by analysis of three important legal cases with particular relevance to the transportation finance sector. Together, they paint a picture of an industry wrestling with fraud risk, debtor resistance, and evolving case law that will shape enforcement strategies for years to come.
Fraud Watch: Fictitious Trade Reporting
The industry is experiencing a surge in fictitious trade reporting, with several red flags surfacing:
New and unusually large credits being reported.
Significantly larger credit amounts extended without history.
Rapidly rising credit scores masking true exposure.
Shortened payment cycles that appear “too good to be true.”
Takeaway: Factors should approach counterparties with sudden improvements in creditworthiness cautiously. Enhanced due diligence, including closer review of trade references, is warranted before advancing on receivables. As we know, fraudsters are becoming increasingly sophisticated, with some now employing AI-generated documentation and communications to create the illusion of legitimate trade.
Oilfield Hauling: Persistent Debtor Risk
Oilfield debtor trends continue to deteriorate:
Anti-assignment resistance: Many oilfield debtors contend that anti-assignment clauses excuse them from complying with Notices of Assignment (NOAs). While the law generally supports enforcement of NOAs, large oilfield debtors leverage their size and resources to make litigation expensive and unattractive.
Stretched terms: Invoice maturities are being reset to 120 or even 180 days, driving up Days Sales Outstanding (DSO) and putting significant pressure on liquidity.
Takeaway: Factors serving oilfield clients should prepare for longer cash cycles and anticipate aggressive pushback on assignments. For those Factors willing to remain, verification and monitoring strategies must account for both the legal friction and the financial strain created by extended terms.
Cases of Note
1. Preference Claims and Computrex
The landmark but little-known case In re Computrex (Bankr. E.D. Ky. 2002) held that payments to factors and carriers are not avoidable preferences because brokers act as mere conduits — freight charges never become part of the Broker’s estate.
This defense is most powerful in large-dollar disputes but remains a valuable negotiating tool in any preference action.
As Factors face more preference claims than at any point in recent memory, counsel should be reminded that the transportation sector has a unique statutory and case-law defense unavailable in most industries.
Why it matters now: Since 2023, bankruptcies among Brokers have increased sharply. Trustees are pursuing preference claims aggressively, often with little regard for industry-specific defenses. Computrex provides Carriers and Factors a strong footing to push back and should be raised early in negotiations and asserted in motion practice and at trial.
2. Triumph Financial v. USPS
Court: U.S. Court of Federal Claims, Case 1:21-cv-01786-AOB
Dispute: Triumph alleged that USPS paid invoices in violation of properly tendered NOAs.
Action: Triumph filed suit to compel USPS to honor assignment obligations.
Resolution: In Q2 2025, Triumph announced a $19.4 million settlement.
Lessons:
This case underscores the power of properly administered NOAs, from initial tender through immediate enforcement when compliance falters.
It also serves as a cautionary tale for factors considering USPS related invoices. There are reports that USPS has stated it “does not accept NOAs,” raising serious questions about whether Factors should continue to purchase these invoices at all.
The federal forum is a reminder that enforcing against USPS implicates sovereign immunity and government-contract law, which extend timelines and increase costs.
3. PAM Transport v. Diamond Pet Foods
Court: U.S. District Court, W.D. Arkansas, Fayetteville Division – Case 5:23-cv-05002-PKH
Parties:
Plaintiff: P.A.M. Transport, Inc., a licensed interstate motor carrier.
Defendant: Schell & Kampeter, Inc. d/b/a Diamond Pet Foods, a shipper.
Claim: Between May 2021 and June 2022, PAM hauled hundreds of shipments of pet food from Diamond’s Dumas, AR facility to Costco in Mexico. PAM alleges $1.2 million remains unpaid.
Defense: Diamond contends it already paid a freight Broker, who failed to remit payment to PAM.
Legal Theories (PAM):
Failure to pay motor carrier freight charges
Breach of contract
Unjust enrichment
Promissory estoppel
The case has progressed through extensive motion practice, with trial scheduled for September 2025.
Core Issue for the Jury: Will jurors accept Diamond’s equitable defense — “It’s not fair to make us pay twice” — or will they side with PAM and affirm that a carrier must be paid regardless of broker default?
Takeaway: The verdict will have far-reaching consequences.
A ruling against Diamond could reaffirm the principle that shippers remain liable for freight charges even when brokers default, strengthening Carriers’ and Factors’ hand in collections.
A ruling for Diamond would validate an equitable defense that could embolden shippers to resist double payment claims, leaving Factors exposed when intermediaries collapse.
This case revisits the long-standing “double payment” problem that has divided courts for decades. The outcome will reverberate across the transportation finance industry.
Final Thoughts
Fraud schemes, oilfield debtor payment resistance, and litigation over fundamental payment obligations all highlight a common thread: uncertainty around payment enforcement. Factors and Carriers must adapt by:
Tightening due diligence against increasingly sophisticated fraud.
Assessing risk accurately in industries where debtor resistance is entrenched.
Watching closely as courts weigh in on preference claims, NOA enforcement, and double-payment disputes.
About David Jencks, Esq.
David Jencks is an attorney that has been practicing for over 25 years in the areas of transportation and transportation finance. He represents Factors and transportation companies in transactional and litigation matters. He is a member of the Transportation Lawyers Association and co-general counsel to the International Factoring Association. For nearly twenty years, David has been a keynote speaker at the IFA’s Annual Convention and Transportation Factoring Meeting. In addition, he has conducted various training sessions and webinars covering diverse aspects of Transportation Factoring including account management, debtor credit, technology, fraud, risk management, problem loads, billing and legal issues. David can be reached at davidjencks@jenckslaw.com.