To improve service, ABF makes information readily accessible to its customers through various electronic pricing, billing and tracing services, referred to by ABF as the "Q-Family" of services. The ABF Q-Family offers a complete package of computer-supported information services. Q-Stat provides a monthly statistical report of a customer’s shipping activity with ABF. Q-Bill offers most of the functions of a traffic department in a PC software package. Q-Bill provides for bill-of-lading preparation, automatic rating with an ABF tariff or competitor tariff, case label production and summary manifesting. Q-EDI is ABF’s computer-to-computer electronic data interchange (EDI) system. The following standard transactions are presently supported:(i) shipment status information for shipment tracking and performance monitoring; (ii) freight bills for payment and auditing, and (iii) bill-of-lading information for carrier billing and rating. Q-Info is a PC-based shipment status information system designed to aid ABF customers in the performance of their daily traffic-related functions. Q-Info provides customized shipment status reports, up-to-the-minute tracing information and freight bill copies. Q-Line is a nationwide hotline which can be reached 24-hours a day, seven days a week, from any touch-tone telephone. It is a voice response system which allows "conversation" with the ABF computer for tracing, rates, loss and damage claims, and transit time information. ABF originated diskette rating and, in management’s opinion, continues to set the industry standard. Q-Rate provides North American rating on diskette. In addition to supporting the ABF tariffs, information regarding coverage, transit times, and mileage is provided. ABF Q-Fax is the newest member to the Q-Family. Q-Fax provides tracking and tracing information to shippers without the computer sophistication to utilize Q-Info or Q-EDI. Customized reports showing shipment activity are faxed directly from ABF’s mainframe computer to the customer’s facsimile machine.

Quality Improvement Process

In 1984, ABF began implementing a Quality Improvement Process to focus on the specific requirements of customers and to develop measurement systems that determine the degree of success or failure in conforming to those requirements. Non-conforming results trigger a structured approach to problem solving, error identification and classification. The Quality Improvement Process requires that all levels of employees be educated in the process itself and trained in their respective job responsibilities so that the focus on customer requirements drives job performance. In that vein, ABF maintains permanent educational facilities in strategic locations to teach the Quality Improvement Process to sales personnel, branch managers and operations personnel in classroom environments. ABF believes that the Quality Improvement Process has enhanced performance in a number of areas.

Revenue Equipment and Truck Terminals

In anticipation of the partial deregulation of the trucking industry, ABF began in 1978 to expand carrier services and geographic coverage. ABF and the Company’s other motor carrier subsidiaries have increased their market coverage by expanding the number of terminals from 67 in early 1978 to 338 currently. A rapid period of terminal expansion from 1978 gave ABF substantially complete national geographic coverage and has not continued at the same pace since 1988. ABF owns 27 of its terminal facilities, leases 81 terminals from its affiliate, ABC Treadco, Inc. ("ABC Treadco") and leases the remaining terminals from independent third parties. ABF’s equipment replacement policy generally provides for replacing intercity tractors every three years, intracity tractors every five to seven years, and trailers (which have a depreciable life of seven years) on an as needed basis (generally seven years or more), resulting in a relatively new and efficient tractor fleet and minimizing maintenance expenses. ABF presently intends to continue its tractor and trailer replacement policy. ABF has a comprehensive preventive maintenance program for its tractors and trailers to minimize equipment downtime and prolong equipment life. Repairs and maintenance are performed regularly at ABF’s facilities and at independent contract maintenance facilities.

In late 1993, ABF initiated a new computerized maintenance program which tracks equipment activity and provides automatic notification of the maintenance needs of each tractor, trailer and converter gear. The program keeps records of preventive maintenance schedules and governmental inspection requirements for each piece of equipment and routes the unit to the nearest ABF maintenance facility where the service can be performed.

In 1994, under its equipment replacement program, ABF acquired 385 intercity tractors, 350 intracity tractors and 500 trailers. Internally generated funds, borrowings under the credit agreement and leases have been sufficient to finance these additions.

As of December 31, 1994, ABF owned or operated the following revenue equipment, which, excluding operating leases, had an aggregate net book value of approximately $96.2 million:

                              Total No.            Units by Model Year           
                              of Units ‘95  ‘94  ‘93  ‘92  ‘91  ‘90  ‘89  Pre-’89 

Intercity Tractors (1)          1,498   10  375  499  499  115
Intercity Trailers (2)            230                                       230
Intercity Trailers-Doubles (3) 12,734       500  820  600  749  499  410  9,156
Intracity Tractors (4)          2,483  209  217  319  280  300  391   45    722
Intracity Trailers              1,364                                     1,364
Pickup/Delivery Trucks             85        14        17                    54
Converters (used to connect
  two 28-foot trailers) (5)     2,785       250                           2,535

(1)    Includes 1,008 tractors being leased under operating lease.
(2)    Includes 100 trailers being leased under capitalized lease. 
(3)    Includes 923 trailers being leased under operating lease and 
       5,130 trailers being leased under capitalized lease. 
(4)    Includes 686 tractors being leased under capitalized lease.
(5)    Includes 50 converters being leased under capitalized lease.

Data Processing

The Company, through a wholly owned subsidiary, is able to provide timely information, such as the status of all shipments in the system at any given point in time, that assists its operating personnel, as well as aids the marketing efforts of ABF. ABF continues to develop its on-line Freight Management System (FMS) aimed at perfecting service to customers and internal cost controls.

The use of Trailer Profiles was deployed in 1994. A computer program assesses the transit progress of each shipment and from this produces a profile on each load of freight moving through the ABF system. This profile then drives the order in which these loads are unloaded and dispatched through the breakbulk and linehaul network. This effectively corrects the movement of a shipment that is running behind schedule without jeopardizing the on-time delivery of other shipments.

The City Planning System was also completed this year. It provides a more dynamic way for terminal management to inventory and route shipments for delivery. Since it resides on the mainframe computer, it is available to all ABF terminals and offers features usually found only on expensive PC-based inbound planning systems.

The Origin Terminal Consolidation Analysis was also completed. It provides a means by which terminal management can collect data pertaining to their outbound shipments available on a given day and determine the best points to which those shipments should be consolidated and loaded. This reduces the cost of handling as well as transit time.

A battery of new programs was completed that will engage executive management more timely and efficiently into exceptions arising in daily operations. These programs continually assess various functions deemed critical to service and/or costs, and include the Delivery Backlog Report, Manning Strategy Model, Outbound Backlog Report, Tardy Spots Report, and Inbound Break Analysis. They are generated only when exceptions are detected. This essentially puts ABF controls on auto-pilot. It provides an efficient means for executive management to stay informed as to what is taking place in daily operations without taking away from their broader responsibilities. As long as operations remain normal, executive management can devote time to long-range planning. Yet when exceptions occur, they are poised to react quickly and decisively, preventing exceptions from becoming problems without having to sift through reams of data. Other such programs are planned for 1995.

During 1994, ABF installed a new customer database management system, AIMS (Account Information Management System). AIMS provides a centralized management tool for maintaining customer information. For example, a file of customer receiving requirements is maintained in AIMS. AIMS can be accessed on-line by all ABF general office departments and terminals.

Insurance and Safety

ABF also believes that it has one of the best safety records in the trucking industry, based in part on having received first, second or third place safety awards from the American Trucking Associations ("ATA") every year for the past 22 years. ABF was awarded the ATA’s President’s Trophy in 1993, 1989 and 1984. The President's Trophy is awarded to the company with the most outstanding safety program. ABF's tractors are equipped with electronic control modules which prevent speeds in excess of 57 mph, thereby maximizing safety and fuel economy. Of the ABF general commodities shipments handled during the year ended December 31, 1994, more than 99% were free of any cargo claim, and of those having cargo claims, 89% were settled within 30 days of the claim date. The following table shows accidents and claims results for the last five years:

                                            Year Ended December 31
                                     1994    1993    1992    1991    1990 

Linehaul miles (000) per DOT 
 linehaul accident (1)              2,201   1,868   1,962   1,816   1,543
Selected categories of insurance 
 expense as a percent of revenue:
    Cargo loss and damage claims     1.14%   1.00%   0.94%   1.03%   1.03%
    Public liability                 0.82    0.86    1.08    0.98    0.69
    Workers’ Compensation            1.87    1.79    1.83    2.00    1.61

Total                                3.83%   3.65%   3.85%   4.01%   3.33%

(1)    An accident, as defined by the DOT, involves personal injury 
       with treatment sought immediately away from the scene of the 
       accident or disabling damage that requires a vehicle to be 
       towed from the scene of the accident.

Specialized Motor Carriers

In addition to ABF, the Company has four other motor carrier subsidiaries: ABF-BC, ABF-Canada, Land-Marine and Cartage. ABF-BC and ABF-Canada concentrate on shipments of general commodities freight primarily in Canada. Land-Marine currently concentrates on shipments of general commodities freight in and out of Puerto Rico and has ICC common carrier authority to operate in the continental United States. Cartage focuses on shipments in and out of Hawaii. In 1994, ABF-BC, ABF-Canada, Land-Marine and Cartage collectively provided approximately 2% of the Company’s motor carrier revenues.