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Running with the big boys: the fortunes of P.A.M. Transport Inc. surge among state's trucking firms.

THE WORDS "TRUCKING" and "Arkansas" are becoming more synonymous every day as the established carriers cut deeper into their nationwide markets and new stars like P.A.M. Transport Inc. twinkle in the firmament of 18-wheelers.

In the past, much of the attention in the northwest Arkansas trucking industry has focused on the big boys: J.B. Hunt Transport Services Inc., ABF Freight System Inc. and American Freightways Corp.

Well, look out fellows -- here come the little guys.

P.A.M., the Tontitown-based trucking company, was losing money before 1990 as it tried in vain to be all things to all clients. With a tighter focus on dedicated freight lanes and new leadership in the person of President Robert Weaver, the worm has turned.

P.A.M.'s stock price appreciated 150 percent in 1992, the second-highest mark among all public companies in the state.

The company's first quarter net income jumped 513 percent over 1992 to $623,499, or nine cents per share. Revenues rose only slightly, from $16.1 million to $16.7 million, but Weaver is optimistic this figure also will shoot up in the year to come.

"We're as well-run as any company in the business," Weaver says. Prior to 1990, that claim would have been laughable.

"Our freight rates were too low," TABULAR DATA OMITTED Weaver says. "Utilization was way too low.

"There was too much idle equipment sitting around. Expenses were pretty much out of control and morale was not the best. The number of units that we were running didn't dictate that we have that many employees."

So Weaver made the tough decision, laying off 20 percent of the workforce in 1990-91.

What he did next was to completely rethink the way P.A.M. approached the market.

The company became heavily involved with the automotive industry, making repeated runs from vendors to the automotive assembly plants. In the past three years P.A.M. has built on this experience, running more predictable, dedicated freight lines for individual companies.

Among other things, P.A.M. now has a dedicated fleet that carries loads from the Midwest to the Mexican border.

P.A.M. also has developed a regional fleet that runs a radius of about 350 miles around northwest Arkansas.

"I'd have to attribute most of P.A.M.'s success to Bob Weaver and his management style," says Lane Kidd, president of the Arkansas Motor Carriers Association.

Kings of the Road

Of course, P.A.M. is only one of the many success stories.

Arkansas trucking companies in 1992 collectively outperformed the industry nationwide in every financial and operating category, according to the AMCA.
P.A.M. Transport Inc.
First Quarter Report
 1993 1992 % change
Net Income $623,499 $101,773 +512
Earnings Per Share 9 cents 2 cents +350
Revenues $16.69M $16.14M +3.40
Operating Income $1.05M $499,495 +111
Operating Ratio(*) 93.7% 96.9% --
Source: Company quarterly report
* Ratio of expenses to revenues. The lower, the better.

J.B. Hunt is in the middle of a revolutionary conversion of its fleet from the standard freight container to a new box that is easier to ship on railways.

As Hunt focuses more on "intermodal" freight transportation, the company recently announced a long-term partnership with Canada's largest railway, CN North America.

Hunt currently hauls about 40,000 trailers each year between the United States and central Canada. In the future, those trucks will drop off their cargo at Chicago and the trains will take them to destinations such as Toronto and Montreal.

To double efficiency, J.B. Hunt plans to stack its containers bunk-bed style for transport through Canada. The plan should be especially effective when CN North America's new "double-stack" tunnel is completed in 1994 in Sarnia, Ontario.

"Some people think |Hunt~ may be pushing his luck," says trucking industry analyst Paul Schlesinger with Donaldson Lufkin & Jenrette of New York City. "But he's clearly very far up in the vanguard, as he was in getting costs down."

Fellow trucking analyst Mark Lee of Morgan Keegan & Co. in Memphis, Tenn., is optimistic about Hunt's strategy.

"When they come out of all this restructuring, they might be in an extremely good position," he says.

Traditional long-haul carrier Cannon Express Inc. of Springdale was one of the few Arkansas trucking firms that did not post impressive numbers in the first quarter of 1993.

In the quarter ended March 31, Cannon saw a 5 percent increase in fuel prices and a 3.6 percent decrease in fleet miles per gallon, caused by snowbound drivers forced to leave their engines running.

Cannon's quarterly earnings fell 10 percent over last year, as earnings per share fell from 11 cents to 10 cents. There was good news, however: Quarterly revenues increased 43.4 percent to $11.14 million.

"The first quarter was sort of tough for companies in the long-haul business," says Ginanne Graves Long, trucking analyst for Stephens Inc. in Little Rock. But she adds that part of the problem was within the company's control.

A Few Setbacks

"They were adding an awful lot of trucks," Long says. "It takes a while to work them into the system. They should be doing better soon."

Arkansas Best Corp. of Fort Smith, parent company of trucking subsidiary ABF, saw a huge drop in profits last year, from $7.2 million in 1991 to a loss of $583,000 in 1992.

But ABF made $10.11 million, after a loss in 1991. Revenues leveled out at $229.2 million and tonnage fell by 0.7 percent in the first quarter of 1993. The best news is that the company created alliances with Dutch and Mexican freight-shipping companies in 1992, opening up transportation opportunities to 45 countries around the world.

American Freightways of Harrison is among the three most successful less-than-truckload (LTL) carriers in the industry, consistently taking market share from the traditional long-haul carriers. Every year since 1987, American has moved its trucking operations to a contiguous area.

After expanding operations in Georgia in January, the company changed its name from Arkansas Freightways. Since then, the firm also has added all-points service in Kentucky as well as the Cincinnati and Evansville, Ind., areas.

The astounding success of USA Truck Inc. of Van Buren also can't be overlooked. USA sports the best 1992 operating ratio of expenses to revenues of any trucking company in the state.

USA's stock began trading in March 1992 and has since doubled. As with other trucking firms in the state, it seems the worst thing awaiting this company is the challenge of high expectations.
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Title Annotation:Arkansas
Author:Haman, John
Publication:Arkansas Business
Date:May 17, 1993
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