What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-03-13 compared with 2023-03-10 · 43 added, 73 removed, 147 unchanged (44% of the section changed)

Unless the context otherwise requires, all references in this Annual Report on Form 10-K to “P.A.M.,”

the “Company,”

“we,”

“our,”

or “us”

Unless the context otherwise requires, all references in this Annual Report on Form 10-K to “P.A.M.,” the “Company,” “we,” “our,” or “us” mean P.A.M.

Transportation Services, Inc.

and its subsidiaries.

We are a truckload dry van carrier transporting general commodities throughout the continental United States, as well as in certain Canadian provinces.

We also provide transportation services in Mexico under agreements with Mexican carriers.

We are a holding company that owns subsidiaries engaged in providing truckload dry van carrier services transporting general commodities throughout the continental United States and Mexico, as well as in certain Canadian provinces.

Our consolidated operating subsidiaries also provide transportation services in Mexico under agreements with Mexican carriers.

Our freight consists primarily of automotive parts, expedited goods, consumer goods, such as general retail store merchandise, and manufactured goods, such as heating and air conditioning units.

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We conduct operations and hold assets principally through the following wholly-owned subsidiaries:

Transport, Inc., Met Express, Inc., Costar Real Estate Holding, Inc., Costar Equipment, Inc., Unmoored Realty, LLC, T.T.X., LLC, P.A.M.

Transport, Inc., Met Express, Inc., Costar Real Estate Holding, Inc., Costar Equipment, Inc., Costar Management, Inc., Select CDL Driving School, Inc., Unmoored Realty, LLC, T.T.X., LLC, P.A.M.

Cartage Carriers, LLC, Overdrive Leasing, LLC, Choctaw Express, LLC, Choctaw Brokerage, Inc., Transcend Logistics, Inc., Decker Transport Co., LLC, East Coast Transport and Logistics, LLC, S & L Logistics, Inc., P.A.M.

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Our operating authorities are held by P.A.M.

Transport, Inc., P.A.M.

Transport, Inc., Met Express, Inc., P.A.M.

Cartage Carriers, LLC, Choctaw Express, LLC, Choctaw Brokerage, Inc., T.T.X., LLC, Decker Transport Co., LLC, and East Coast Transport and Logistics, LLC.

Effective on January 1, 2010, the operations of most of the Company’s operating subsidiaries were consolidated under the P.A.M.

Transport, Inc.

name in an effort to more clearly reflect the Company’s scope and available service offerings.

We are headquartered and maintain our primary terminal, maintenance facilities, and our corporate and administrative offices in Tontitown, Arkansas, which is located in northwest Arkansas, a major center for the trucking industry and where the support services for most major truck and trailer equipment manufacturers are readily available.

Segment Financial Information

The Company's operations are all in the motor carrier segment and are aggregated into a single reporting segment in accordance with the aggregation criteria under Generally Accepted Accounting Principles (“GAAP”).

Our operations can generally be classified into truckload services or brokerage and logistics services.

The operations of the Company’s subsidiaries are all in the motor carrier segment and are aggregated into a single reporting segment in accordance with the aggregation criteria under Generally Accepted Accounting Principles (“GAAP”).

Our subsidiaries’ operations can generally be classified into truckload services or brokerage and logistics services.

This designation is based primarily on the ownership of the asset that performed the freight transportation service.

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The remaining operating revenues, before fuel surcharge, for the same periods were generated by brokerage and logistics services, representing 34.7%, 33.9% and 33.0%, respectively.

Approximately 66% of the Company's revenues are derived from domestic shipments while approximately 34% of the Company’s revenues are derived from freight originating from or destined to locations in Mexico or Canada.

Impact of COVID-19

The Company’s primary concern during the COVID-19 pandemic has been to do its part to protect its employees, customers, vendors and the general public from the spread of COVID-19 while continuing to serve the vital role of supplying essential goods to the nation.

Where feasible, our employees are working remotely from their homes.

For essential functions, including our driving professionals, we have distributed cleaning and protective supplies to various terminals so that they are available to those that need them, increased cleaning frequency and coverage, and provided employees direction on precautionary measures, such as sanitizing truck interiors, personal hygiene, and social distancing.

We will continue to adapt our operations as required to ensure safety while continuing to provide a high level of service to our customers.

While we and most of our customers have returned to normal operations and economic activity continued to increase during 2021 and 2022, we continue to monitor ongoing developments with the COVID-19 pandemic.

Any future waves or outbreaks of alternative strains of the virus, including the current spread of the Delta and Omicron variants, could adversely impact our future operations and financial results.

On September 9, 2021, President Biden announced that he has directed the Occupational Safety and Health Administration (OSHA) to develop an Emergency Temporary Standard (ETS) mandating either the full vaccination or weekly testing of employees for employers with 100 or more employees.

On January 13, 2022, the Supreme Court ruled that the mandate could not be enforced.

We will continue to monitor new regulations for any potential impacts to our operations.

The ultimate extent of the impact of any future outbreaks or adverse developments with the pandemic on the Company’s financial and operating results, which could be material, will be determined by the length of time such outbreak continues, its severity, further government regulations imposed in response to the pandemic and the effect of any such outbreak on the economy and transportation demand.

The Company believes we will be able to continue to finance our near-term needs for working capital over the next twelve months, as well as any planned capital expenditures during such period, with cash balances, cash flows from operations, and borrowings believed to be available from financing sources.

Approximately 63% of the Company's revenues are derived from domestic shipments while approximately 37% of the Company’s revenues are derived from freight originating from or destined to locations in Mexico or Canada.

Business and Growth Strategy

Our strategy focuses on the following elements:

Providing a Full Suite of Complimentary Truckload Transportation Solutions.

Providing a Full Suite of Complementary Truckload Transportation Solutions.

Our objective is to provide our customers with a comprehensive solution to their truckload transportation needs.

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We provide verbal and electronic updates through various forums to customers to allow visibility of their products as they progress through the transport process.

Many of our customers depend on us to deliver shipments on a time-definite basis, meaning that parts or raw materials are scheduled for delivery as they are needed on a manufacturer’s production line.

The need for this service is a product of modern manufacturing and assembly methods that are designed to decrease inventory levels and handling costs.

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Expenses are intensely scrutinized for opportunities for elimination, reduction or to further leverage our purchasing power to achieve more favorable pricing.

According to the American Trucking Association’s “American Trucking Trends 2022”

report, the trucking industry generated over $875 billion in revenue during 2021 which represented approximately 80% of the total U.S.

freight spend.

According to the American Trucking Association’s “American Trucking Trends 2023” report, the trucking industry generated over $940 billion in revenue during 2022 which represented approximately 81% of the total amount spent on U.S.

The truckload industry is highly fragmented and is impacted by several economic and business factors, many of which are beyond the control of individual carriers.

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volatile fuel costs;

increasing insurance costs;

pressure on less profitable or undercapitalized carriers to consolidate or exit the industry.

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Our marketing emphasis is directed to that portion of the truckload market which is generally service-sensitive, as opposed to being solely price driven.

We seek to become a “core carrier”

for our customers in order to maintain high utilization and capitalize on recurring revenue opportunities.

We seek to become a “core carrier” for our customers in order to maintain high utilization and capitalize on recurring revenue opportunities.

Our marketing efforts are diversified and designed to gain access to dedicated, expedited, regional, automotive, and long-haul opportunities (including those in Mexico and Canada) and to expand brokerage and logistics offerings.

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General Motors Company accounted for approximately 12%, 13% and 11% of our revenues in 2023, 2022 and 2021, respectively.

accounted for approximately 9%, 9% and 5% of our revenues in 2022, 2021 and 2020, respectively.

Fiat Chrysler Automobiles accounted for approximately 7%, 6% and 5% of our revenues in 2023, 2022 and 2021, respectively.

accounted for approximately 6%, 9% and 9% of our revenues in 2023, 2022 and 2021, respectively.

We also provide transportation services to other manufacturers who are suppliers for automobile manufacturers.

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They are also responsible for maintaining compliance with the Federal Motor Carrier Safety Administration regulations.

Our trucks are equipped with cellular-based global positioning and communications systems that allow fleet managers to communicate directly with drivers.

Our trucks and trailers are equipped with cellular-based global positioning and communications systems that allow fleet managers to communicate directly with drivers.

Drivers provide location, status, and informational updates directly to our computer system which increases productivity, convenience, and customer visibility.

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None of our employees are represented by a collective bargaining unit, and we believe that our employee relations are good.

At December 31, 2022, we also had 407 drivers for independent contractors under contract who were compensated on a per mile basis.

Our drivers are paid for an array of services, including calculated miles driven, loading and unloading, additional stops, detention and layovers, among other things.

At December 31, 2023, we also had 390 independent contractor drivers under contract who were compensated on a per mile basis.

Drivers are paid for an array of services, including calculated miles driven, loading and unloading, additional stops, detention and layovers, among other things.

We contract with independent contractors to supply one or more trucks and drivers for our use.

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We believe our lease-purchase program has contributed to our ability to attract and retain independent contractors.

At December 31, 2022, approximately 288 independent contractors were leasing 428 trucks in this program.

At December 31, 2023, our lease-purchase program had 333 trucks available for use, with approximately 280 drivers participating in the program.

Diversity and Inclusion.

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The physical health, wellbeing, and mental health of our employees is crucial to our success.

Most recently, our primary concern during the COVID-19 pandemic has been to do our part to protect our employees, customers, vendors and the general public from the spread of COVID-19 while continuing to serve the vital role of supplying essential goods to the nation.

We will continue to adapt our operations as required to ensure safety while continuing to provide a high level of service to our customers.

In addition to strict application screening and drug testing, before being permitted to operate a vehicle, our drivers must undergo classroom instruction on our policies and procedures, safety techniques as taught by the Smith System of Defensive Driving, and the proper operation of equipment, and must pass both written and road tests.

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We reward our employees by providing competitive compensation, benefits and incentives throughout all levels in our organization, including for our drivers.

Drivers can earn bonuses by recruiting other qualified drivers who become employed by us, and both cash and non-cash prizes are awarded for achieving certain safety and fuel efficiency goals.

Drivers can earn bonuses by recruiting other qualified drivers who become employed by us, and both cash and non-cash prizes are awarded for achieving certain safety, productivity and fuel efficiency goals.

Intense competition in the trucking industry for qualified drivers has resulted in additional expense to recruit and retain an adequate supply of drivers and has had a negative impact on the industry.

Our operations have also been impacted and we have occasionally experienced under-utilization and increased expenses due to a shortage of qualified drivers.

We place a high priority on the recruitment and retention of an adequate supply of qualified drivers.

Therefore, we place a high priority on the recruitment and retention of an adequate supply of qualified drivers.

Our truck fleet averages 2.9 years old, keeping our drivers safe, comfortable, and on the road.

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The website address is www.pamtransport.com .

On our website, under the caption “Investors,”

the Company makes available, free of charge, its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) as soon as reasonably practicable after it electronically files or furnishes such materials to the Securities and Exchange Commission.

On our website, under the caption “Investors,” the Company makes available, free of charge, its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) as soon as reasonably practicable after it electronically files or furnishes such materials to the Securities and Exchange Commission.

Generally, our revenues do not exhibit a significant seasonal pattern;

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We are a common and contract motor carrier regulated by various United States federal and state, Canadian provincial, and Mexican federal agencies.

These regulatory agencies have broad powers, generally governing matters such as authority to engage in motor carrier operations, motor carrier registration, driver hours-of-service (“HOS”), drug and alcohol testing of drivers, and safety, size, and weight of transportation equipment.

The primary regulatory agencies affecting the Company’s operations include the Federal Motor Carrier Safety Administration (“FMCSA”), the Pipeline and Hazardous Materials Safety Agency, and the Surface Transportation Board, which are all agencies within the U.S.

Department of Transportation (“DOT”).

We believe that we are in compliance in all material respects with applicable regulatory requirements relating to our business and operate with a “satisfactory”

rating (the highest of three rating categories) from the DOT.

Department of Transportation (“DOT”).

We believe that we are in compliance in all material respects with applicable regulatory requirements relating to our business and operate with a “satisfactory” rating (the highest of three rating categories) from the DOT.

In addition, we are subject to compliance with cargo-security and transportation regulations issued by the Transportation Security Administration, a component department within the U.S.

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In December 2011, the FMCSA released new rules regulating HOS that became effective in July 2013.

These rules reduced the maximum hours that could be worked in a consecutive seven-day period from 82 to 70, required that a driver take a mandatory thirty-minute break during each consecutive eight hour driving period, and required that a driver take a 34-hour rest period, or restart, that included two periods between 1:00 a.m.

and 5:00 a.m.

that could only be used one time every seven calendar days.

These rules required that a driver take a mandatory thirty-minute break during each consecutive eight hour driving period.

In July 2012, Congress passed legislation renewing the mandate for electronic logging devices and designated authority to the FMCSA to propose a new rule.

In December 2015, the FMCSA amended the Federal Motor Carrier Safety Regulations to establish minimum performance and design standards for HOS electronic logging devices (“ELDs”), requirements for the mandatory use of these devices by drivers currently required to prepare HOS records of duty status, requirements concerning HOS supporting documents, and measures to address concerns about harassment resulting from the mandatory use of ELDs.

In May 2018 the FMCSA released a notice that they would allow a motor carrier that installed and required its drivers to use an Automatic on Board Recording Device (“AOBRD”) before December 18, 2017 and who uses registered ELD capable devices that run compliant AOBRD software to continue to do so until December 16, 2019.

The Company was an early adopter of ELD capable devices, requiring the devices to be installed on its entire fleet and requiring its drivers to use AOBRD’s since 2010.

These rulings affect the majority of carriers, including us, and the Company’s ELD devices were in compliance with FMCA requirements prior to the December 16, 2019 deadline.

The FMCSA administers carrier safety compliance and enforcement through its Compliance, Safety, Accountability (“CSA”) program that became effective in December 2010.

CSA is designed to measure and evaluate the safety performance of carriers and drivers through categorization of inspection and crash results into Behavior Analysis and Safety Improvement Categories (“BASICs”) including unsafe/fatigued driving, driver fitness, controlled substances and alcohol, maintenance, cargo, and crashes.

The Company was an early adopter of ELD capable devices, requiring the devices to be installed on its entire fleet and requiring its drivers to use AOBRD’s since 2010.

These rulings affect the majority of carriers, including us, and the Company’s ELD devices were in compliance with FMCSA requirements prior to the December 16, 2019 deadline.

The FMCSA administers carrier safety compliance and enforcement through its Compliance, Safety, Accountability (“CSA”) program that became effective in December 2010.

BASIC scores are evaluated relative to carrier peer groups to determine carriers that exceed certain thresholds, identifying them for intervention.

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In addition to FMCSA action, a BASIC score that exceeds an intervention threshold might have a negative impact on our ability to attract customers and drivers.

The Environmental Protection Agency (“EPA”) and the National Highway Traffic Safety Administration (“NHTSA”) jointly developed new standards for various vehicles, including heavy duty trucks, that were adopted in August 2011 and cover model years 2014 through 2018.

The standard adopted for heavy duty trucks was intended to achieve a reduction in CO 2 and fuel consumption ranging from 7% to 20% by model year 2017.

In August 2016, the EPA and NHTSA finalized the second phase of these standards which will further reduce greenhouse gas emissions and fuel consumption for heavy duty trucks through model year 2027.

In August 2016, the EPA and NHTSA finalized the second phase of these standards which further reduces greenhouse gas emissions and fuel consumption for heavy duty trucks through model year 2027.

In December of 2022, the EPA finalized an additional phase of standards which is intended to reduce nitrous oxide (NOx) emissions to 0.035 grams per horsepower-hour during normal operation, 0.05 grams at low load and 10.0 grams at idle for vehicles with model years 2027 and above.

Compliance with these federal and state requirements has increased the cost of our equipment and may further increase the cost of replacement equipment in the future.

The FMCSA Commercial Driver’s License (“CDL”) Drug and Alcohol Clearinghouse (“Clearinghouse”) became effective January 6, 2020.

This new database contains information pertaining to violations of the U.S.

Department of Transportation controlled substances and alcohol testing program for holders of CDL’s.

The FMCSA Commercial Driver’s License (“CDL”) Drug and Alcohol Clearinghouse (“Clearinghouse”) became effective January 6, 2020.

This database contains information pertaining to violations of the U.S.

Department of Transportation controlled substances and alcohol testing program for holders of CDL’s.

The Clearinghouse rules requires FMCSA regulated employers, among others, to report to the Clearinghouse information related to violations of the drug and alcohol regulations.

Further, the rules require that FMCSA regulated employers query current and prospective employees’

drug and alcohol violations before permitting those employees to operate a commercial motor vehicle on public roads, and to recheck each employee annually.

Further, the rules require that FMCSA regulated employers query current and prospective employees’ drug and alcohol violations before permitting those employees to operate a commercial motor vehicle on public roads, and to recheck each employee annually.

The system is intended to remove the ability of prospective employees to fail to disclose past drug and alcohol violations at previous employers to potential employers.

We anticipate enforcement of the Clearinghouse will remove certain drivers from the pool of drivers available to the industry and increase competition and related costs to attract and retain the remaining qualified drivers.

Our motor carrier operations are subject to additional.

environmental laws and regulations, including laws and regulations dealing with the transportation of hazardous materials and other environmental matters, and our operations involve certain inherent environmental risks.

Our motor carrier operations are subject to additional environmental laws and regulations, including laws and regulations dealing with the transportation of hazardous materials and other environmental matters, and our operations involve certain inherent environmental risks.

These laws and regulations have the effect of increasing the costs, risks and liabilities associated with our applicable operations.

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If we should fail to comply with applicable regulations, we could be subject to substantial fines or penalties and to civil and criminal liability.

As global warming issues become more prevalent, federal, state and local governments, as well as some of our customers, have made efforts to respond to these issues.

This increased focus on sustainability may result in new legislation or regulations and customer requirements that could negatively affect us as we may incur additional costs or be required to make changes to our operations in order to comply with any new regulations or customer requirements.

Legislation or regulations that potentially impose restrictions, caps, taxes, or other controls on emissions of greenhouse gases such as carbon dioxide, a by-product of burning fossil fuels such as those used in the Company’s trucks, could adversely affect our operations and financial results.

As issues related to climate change become more prevalent, federal, state and local governments, as well as some of our customers, have made efforts to respond to these issues.

This increased focus on sustainability may result in new legislation or regulations, as well as customer requirements that could negatively affect us as we may incur additional costs or be required to make changes to our operations in order to comply with any new regulations or customer requirements.

More specifically, legislative or regulatory actions relating to climate change could adversely impact the Company by increasing our fuel costs and reducing fuel efficiency and could result in the creation of substantial additional capital expenditures and operating costs in the form of taxes, emissions allowances, or required equipment upgrades.

Company operations are often conducted in industrial areas, where truck terminals and other industrial activities are conducted, and where groundwater or other forms of environmental contamination have occurred, which could potentially expose us to claims that we contributed to the environmental contamination.

We believe we are currently in material compliance with applicable laws and regulations and that the cost of compliance has not materially affected results of operations.

We believe we are currently in material compliance with applicable laws and regulations and that the cost of compliance has not materially affected results of operations to date.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business