?Perfect Storm? Rocks but Doesn?t Sink USA Truck

Robert M. Powell, chairman, president and CEO of USA Truck Inc. in Van Buren, called 2000 the year of “The Perfect Storm” for the trucking industry.

But unlike the fishing vessel in the movie, Powell’s boat survived.

“USA Truck felt the full brunt of 2000,” Powell said. “Record revenues in excess of $226 million could not overcome the ‘perfect storm’ born of a slowing economy, steadily increasing interest rates, out-of-control fuel prices, an unprecedented driver shortage and a sagging used tractor market.”

The industry did not see mass bankruptcies or consolidations. But trucking firms as a group were down in 2000. Powell’s comments came Jan. 24 with the company’s financial report, released for the fourth quarter, which ended Dec. 31.

USA Truck, a medium-haul, common and contract carrier of general commodities, had operating revenues of $57.6 million for the quarter, up about 11.5 percent from $51.6 million for the same period in 1999.

But the bad news was a net loss of $1.2 million, or 13 cents per share, compared with a net profit of $2.2 million, or 24 cents per share, in the same period in 1999.

On Jan. 21, A.G. Edward & Sons downgraded the company’s status from “buy” to “maintain position” on the basis of fourth-quarter expectations.

The problem, Powell said, was that although USA Truck’s annual revenue grew by 36 percent, from $166.4 million to $226.6 million, net income for 2000 fell 98 percent, from 92 cents to a penny per share.

Revenue per mile was up a nickel to $1.18 compared with 1999, but fuel cost rose 6 cents to 26 cents per mile.

Powell said the company tried to combat driver turnover with a 16 percent pay raise Oct. 1 — a move that added $1.5 million to the company’s cost base. But the large number of students and inexperienced over-the-road drivers hired during the previous few quarters increased the number and severity of accidents.

As a result, USA Truck reported its highest ever rate of insurance cost — 8.4 percent of revenue in the fourth quarter of 2000, up from 4.4 percent of revenue in the same period the previous year.

Now, another large pay increase aimed at curbing turnover is scheduled to go into effect Feb. 28. Powell said he hoped the payback would drastically reduce driver turnover and result in fewer accidents and better utilization of its tractors and trailers.