Economy challenges trucking companies

During the last year, Chattanooga trucking companies have weathered a lot of change.

Changes in the transportation industry have challenged companies such as U.S. Xpress Enterprises and Covenant Transportation's traditional business model -- cross-country delivery.

Also, fuel costs and low freight volume have forced executives to cut costs companywide.

U.S. Xpress and Covenant have reduced their driving force, cut miles for drivers and reduced executive pay. However, executives at both companies are hopeful for the future and say while thousands of trucking companies have gone out of business, they will be around.

"We lost a good bit of money," said Richard Cribbs, chief financial officer at Covenant, a Chattanooga-based trucking company. "We are all sharing in some pain. We are making good strides to get this turnaround."

Executives at Covenant Transportation Group took a voluntary 5 percent to 10 percent pay cut this year because of revenue declines in 2008. Mr. Cribbs said the company had a net loss of $53 million in 2008.

Joey Hogan, executive vice president at Covenant, said the company reduced its fleet size by 5 percent in the last few months of 2008 and cut another 5 percent at the beginning of 2009. In total, 350 trucks were cut, including some owner operators, he said.

At U.S. Xpress, low-level employees lost 5 percent from their paycheck this year. Vice presidents lost 7 percent and executive management lost 10 percent, said Greg Thompson, a spokesman for U.S. Xpress.

While local trucking companies are struggling, like most, to survive the current recession, both companies have grown their investment in regional trucking routes, officials said. They also believe that the bankruptcies and closures in the trucking marketplace will give them leverage when the economy turns around.

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