KLLM Expects Loss in 4th Quarter
President Jack Liles said the company boosted the average base pay of truck drivers approximately 20% on Sept. 1. The change increased the typical driver’s total compensation approximately 7%.
"Over time, we expect the higher wage rates will be more than offset by reductions in operating expenses through improvements in safety, fuel economy and lower recruiting and training expenses," Mr. Liles said in a statement. "These improvements have not occurred as soon as anticipated, however, and as a result our margins have been squeezed."
At the beginning of the fourth quarter, approximately 10% of KLLM’s fleet was idle because of a shortage of drivers, according to Chief Financial Officer Steven L. Dutro.
KLLM raised the base pay of drivers with one year of experience to 30 cents a mile. The rate goes up to 39 cents a mile for drivers with the most experience.
Mr. Dutro said he expects driver wages to continue to escalate in the next couple years, putting pressure on fleets to raise rates.
KLLM employs approximately 1,900 drivers.
A year ago, KLLM lost $14.5 million, or $3.34 a share, on revenue of $57.4 million in the fourth quarter of 1997. In the first nine months of 1998, the company earned $2.4 million (56 cents) on revenue of $174.4 million.
