When Nature Rages, Cushman and Carriers ‘Take the Hit'

When Nature Rages, Cushman and Carriers ‘Take the Hit'
Dan Cushman, president and CEO of PAM Transport Inc., sits in his office in Tontitown. (Brooke McNeely Galligan)

Dan Cushman fully understands that sometimes a company’s bottom line has to take a (hopefully) temporary beating when natural disasters hit.

Cushman is the president and CEO of PAM Transport Inc. of Tontitown and had to take the hit when a heavy thunderstorm swept through Laredo, Texas, in May. There is some confusion as to whether the storm was a tornado or just heavy winds with flash flooding, but when it was over a critically important border crossing was heavily damaged.

The World Trade Bridge, which more than 10,000 trucks cross daily, was damaged and traffic was rerouted for a week. What kind of cargo crosses the bridge most heavily? Auto parts. What cargo does PAM specialize in? You guessed it.

“That shut down the border for five days,” Cushman said. “That absolutely impacted the bottom line. You simply don’t recover from that. You just take the hit.”

PAM reported second-quarter income of $1.6 million, which was down from nearly $3.99 million in the same quarter of 2016. How much that was depressed by the tornado/heavy winds and how much by just a harsh environment for truckers is a matter of opinion.

Cushman is again facing natural disaster unknowns after Hurricane Harvey hit south Texas on Aug. 26, followed by Hurricane Irma hitting Florida on Sept. 9. On top of that, a powerful earthquake shook central Mexico on Sept. 19.

PAM has a lot of lanes in south Texas and the disastrous damage and flooding caused service interruptions, but the storm also provided an opportunity. PAM is a full truckload carrier — which means its loads are devoted 100 percent to one customer — but its drivers often have slack in their schedule.

Many businesses were looking to get their goods out of south Texas, and PAM drivers with availability were able to add extra loads.

“There were a lot of phone calls coming from people asking for capacity and willing to buy that capacity at any rate,” Cushman said. “We were very loyal to our existing customer base. We gave them capacity. We didn’t charge more because in a lot of cases we had to deadhead in [drive with an empty truck] to meet their needs. We made a point of we’re not gouging anyone. There was tremendous demand that impacted overall capacity.”

Cushman said when drivers had capacity availability, some customers were willing to pay to have the drivers deadhead to the pickup point. That was not across the board because there were obviously interruptions on the customer side and on the delivery side.

Cushman said PAM doesn’t do much work in Florida but many of the company’s drivers live there. When Irma came roaring through the Caribbean islands toward Florida, many of PAM’s drivers headed home — with Cushman’s blessing.

“When that happened and drivers reach out and say, ‘I have to get home,’ honestly there is not a lot of discussion [other than] ‘Yes, you do,’” he said. “If I said, ‘I have to go check on my family’ and you say no, I’d quit and go check on my family. We just absolutely figure out ways. Hopefully you have a load they can carry on their way home.”

The past six quarters have been rough for carriers because of a nasty combination of stagnant shipping rates and severe driver shortages. Rates have been ticking up recently, and Cushman said he is as optimistic as he can be after viewing his “cloudy crystal ball” that the rate increase trend will continue.

“I had a customer tell me, ‘Hey Dan, in our budget we’re looking at a 3 percent reduction in rates,’” Cushman said. “I said, ‘I hope you’re not including me in there because, hoo buddy, you must not be following the trending news.’ Capacity is tight and demand is higher and costs have gone up the last however many years.

“My costs go up every year and I don’t get rate increases every year. Rates haven’t gone up in years. Carriers need help.”