Trading for shares in Swift Transportation Co. tanked Sept.
15 after the company lowered third-quarter earnings, leading to several analyst
downgrades. Poor driver pay was one issue cited by analysts.
The Phoenix-based trucking company said earnings for the
third quarter would be lower than expected by about 5 cents per share because
the higher cost for fuel was not being recovered by its fuel surcharge on
Another 5 cents per share would be lost because expectations
fell short on the ability to increase rates per mile traveled.
To combat that loss, Swift said it would revise its fuel
surcharge to 1 cent for every 5 miles traveled, rather than for every 6 miles
Meanwhile, investment firm Bear Stearns downgraded its
rating of Swift’s stock to “underperform,” saying the company “is suffering
from structural issues including not enough management and systems for its
tremendous size, a poor driver pay scale, a relatively aged fleet and a bad mix
of freight in some lanes.”
The company added: “We believe Swift’s issues could take
years to remedy and will require tough decisions requiring it to shed large
amounts of freight, change its driver strategy and take on some new management.
“We believe current senior management has the skills to
effect this turnaround but we question whether they have the stomach to effect
a long term turn around plan which may cause near term pain.”