Is PAM Next?

Lot of these small to mid sized carriers got bought up by private equity and/or took out alarming amounts of debt. Combine that with higher fuel costs, inflated truck prices, unreliable trucks and H1Bs/illegal drivers and shadow carriers/brokers driving rates through the floor and insurance through the roof.....

And yea thats why your seeing so many folding up. Guys with little/no debt will be fine. Guys with lots of debt. Less so

 

Well said.

 

Who isn't feeling the pinch? Every company just about is experiencing losses each quarter.

 

My company sure isn’t..we so busy we can’t even keep up.. they’re turning down thousands of loads because we don’t have the capacity right now…miles are very good here right now.

 

Awesome!

 

From the freight dive article -

• PAMT’s truckload operating ratio was 146.2%, up from 137.5% a year ago as total miles and total loads each saw year over year declines.
  - Yeah - Don’t think that’s sustainable much longer, losing 46c for every $1 made.

 

Probably ran up debt as mentioned. Paid the board nicely. Not to worry, they’ll just move the freight to another company they have interest in. Same people, different company.

 

Yup, if you look into the actual WHY a lot of these companys failed. Especially the public ones. You begin to see a pattern. Goes a bit like this.

Shareholders tie the CEOs bonus to performance and profit then offer generious severance packages so even if the CEO screws up he gets rich. So the company ceo takes on a ton of debt to expand as quickly as posible and #### if its sustainable during high freight demand and usually buy large amounts of equipment, recently often at vastly inflated prices(see 300-400K 579s during the covid era as good example). Company posts record breaking revenue and counts the debt as profit. So shareholders get huge payouts...at first. Good times end and go to average or worse lean times as is normal in trucking if you watch freight volumes over the last 50+ years.

That debt is now unsustainable. However the shareholders still need to be paid or else. So they take out more debt on debt and use that to zero out taxes and pay shareholders, so on paper they are still solvent. Also to buy themselves more time to try and fix the issue. It doesnt work, so do a few cycles of this. Buy a company or two to get more lanes and kick the can down the road as long as you can. Eventually the company hits a breaking point and the writeing is on the wall. The CEO pulls his golden parachute and exits stage left. New CEO is picked often from the ranks of the company as a scape goat. Then walks into a burning building and is shown the real books. Company colapses. New CEO is blamed and often may face legal action and a ruined rep. Meanwhile the old CEO is laughing the whole way to the bank. Shareholders dont realize they killed their own golden goose.

Everyone outside the company who doesnt bother or know how to follow along sees it colapse. "OH GOD THE SKY IS FALLING!!!!! THE ECONOMY IS AWFUL!!!!" WAAAAAAHHHH"

And welcome to why you see so many companys starting to fold up. And if you dont belive me. Pam is a publically traded company. So all this info is easy to verify. Sadly a lot of people like to howl about how trump killed the economy. And regardless of any damage he may or may not have caused. The facts of the matter are these companys didnt take this debt on all at once. Its been a gradual thing and in pams case you can follow along the trail.

For pam a lot of the woes started in 2009. Cushman started to agressivly expand shortly after he took the helm. Company started posting losses and getting sued for a ton of shady things so he resigned in 2020. New ceo vitiritto takes over in 2020 and takes out a ton more debt and buys a giant company try to stave things off he also doubles down on shady practices leading to multiple lawsuits. He also resigns in 25 and btw now is at swift. And you now have stewart who has been left holding the flameing bag of crap. But people will STILL cry its trumps fault. Yet the company started falling apart in the obama era. Even if trump never took office pam would have still failed. And many many many companys are like this.