Economy Down; Profits Up

Economy Down; Profits Up
July 28, 2008

If you're involved in the trucking industry today, it's a fact that everyone has a story to tell, especially if it relates to the economy. The rising price of fuel is a growing global concern, especially for those whose livelihood depends on daily consumption of this expensive commodity.

As America's economy continues its downward slide, due, in part, to the fuel crisis, the trucking industry has taken a beating. Many independent drivers, and small trucking companies, have been put out of business due to their inability to cope with the economic burden imposed by high fuel costs. However, all is not bleak for the industry. When the going gets tough, the tough get going. For some of America's leaders in the trucking industry, profits have never been better.

USA Truck Inc. is a dry van truckload carrier transporting general commodities throughout the continental United States and portions of Canada and Mexico. The Van Buren, Arkansas-based business, with a fleet in excess of 2,500 trucks, is traded on the NASDAQ and recently posted strong second quarter results.

As operating costs have skyrocketed over the last eighteen months, large fleet operators, like USA Truck, have learned the secrets to survival and success. Companies have adopted a different, far more economical, approach to managing their fleet.

Wall Street analysts predicted serious second quarter losses for the trucking industry. To their amazement, USA Truck's profits increased by 32 percent, compared with the same period last year. Their share prices have increased by a stunning 25.5 percent.

Their secret? The company became far more disciplined about its truck network. They placed trucks where they should be. Trucks logged shorter lengths of haul and improved the average miles per tractor per week. Careful planning shaved roughly 70 miles per trip from each truck. The company has begun to focus on serving the more lucrative shorter-haul market. They have slightly trimmed the number of trucks in use, thus maximizing the use of each vehicle. Optimum utilization has paid off, allowing the company to earn the greatest amount of revenue per hour of the driver's hours of service.

By achieving an acceptable balance between fleet capacity and freight demand, large operators, like USA Truck, are managing to keep ahead of expenses and show profits, despite the continual rise in expenses. Also, better freight selection is expected to help the carrier's improve their revenue per mile.

By going back to basics, and managing their businesses in a far more accountable manner, the larger operators will continue to keep America supplied, and their shareholders happy.