Trial set for Cannon Express

A $20 million lawsuit filed against Cannon Express Inc. of Springdale is scheduled for trial in September in Lufkin, Texas.

The lawsuit is a consolidation of three separate suits filed after a May 1996 accident in which a Cannon Express driver and a woman were killed. The company driver apparently had a heart attack while driving and collided with another tractor-trailer rig. The accident created a fire that killed the driver, the woman and seriously injured the woman’s daughter.

The three lawsuits originally were filed against the company by the woman’s husband and her two brothers.

“I guess we don’t have any choice,” Dean Cannon, founder and president of the company, says of the trial. “It was a tragic, unavoidable accident, but the company did nothing wrong.”

Cannon says his company couldn’t pay such a judgment. The company maintains liability insurance with a limit of $1 million for each claim.

“We never imagined a lawsuit of that size,” Cannon says.

If a jury finds his company responsible and awards the claims that have been requested, Cannon Express would be forced to use federal bankruptcy laws to continue operating, he says.

The company settled a $700,000 lawsuit earlier this year that was filed after an accident involving one of the company’s drivers. The suit was filed in Phoenix in July 1995 by a man who lost a leg in the accident. Although the details of the settlement aren’t available, Cannon Express paid the $150,000 deductible on the insurance policy.

Trucking Industry Benefits From Trend

The trucking industry is benefiting from the national trend of corporate downsizing and specialization.

As companies reduce their size and concentrate their efforts in fewer areas, they often choose to pass the responsibility of moving their merchandise and products to companies that specialize in moving freight. Large trucking companies usually can move the freight quicker and cheaper than a company operating its own small fleet of trucks.

The trucking industry calls it dedicated contract service, and it’s one of the fastest-growing segments of the industry.

P.A.M. Transportation Services Inc. of Tontitown devotes about 50 percent of its resources to it and is wanting more. P.A.M. Dedicated Services Inc. is a subsidiary of the company and contracts most of its service with the automotive industry. Earlier this year, the subsidiary bought $1.7 million in new equipment that it is paying for in 48 monthly installments at 7.5 percent interest.

The company runs most of the contract service in the Midwest and Southwest and most of the service is round trip.

J.B. Hunt Transport Services Inc. considers dedicated contract service as one of the three most important divisions of the company. Last year, the company competed for and won an international certification by meeting 19 requirements for providing the service.

“The ISO 9002 certification is a substantive expression of [our] commitment to quality,” says Vincent McLoughlin, president of J.B. Hunt Dedicated Contract Services. “We are proud of this achievement and expect ISO 9002 to be a significant asset for us.”

Steve Palmer, a vice president with Hunt, says the trend has been developing for about five years, mostly among the larger corporations. The companies usually advertise for bids when considering a contract carrier, Palmer says.

“We go to the customer and ask, ?What do you want?'” Palmer says. “Then, we give it to them.”

Driver Shortage Continues

Competition for drivers continues to haunt the trucking industry, and experts expect it to be a problem for the next several years.

Officials at the four largest trucking companies in Northwest Arkansas cite driver shortage as a critical problem, and all are looking for ways to solve it.

J.B. Hunt Transport Services Inc. of Lowell shocked the industry earlier this year when it raised the base pay of experienced drivers by 33 percent. Then, the company added another shock by sending its chairman, president and other top managers to truck stops to recruit drivers. Managers still frequent the truck stops.

“We need to go out there face-to-face with the drivers and make sure they understand,” says Steve Palmer, a vice president with the company. “The drivers can ask us questions and we can deliver the answers. The drivers perceive a little more credibility and it impresses them.”

Cannon Express Inc. changed its company policy in March and began recruiting and hiring more experienced drivers after more than a year of losing revenue because of idle equipment. The company started a 401(k) program for drivers and raised their pay in 1994. Currently, drivers average between $30,000 and $35,000 annually.

Company officials say the focus on more experienced drivers has helped the company. As of May 14, the company had enough drivers for all its trucks.