General

Arkansas Best Corporation (the "Company"), the parent holding company, is a freight transportation services and solutions provider with four reportable operating segments. The Company's principal operations are conducted through its Freight Transportation segment, which consists of ABF Freight System, Inc. and other subsidiaries of the Company that are engaged in freight transportation (collectively "ABF"). The Company's other reportable operating segments, primarily non-asset-based businesses utilizing the services of third-party providers, are Truck Brokerage and Management, Emergency and Preventative Maintenance, and Special Services Logistics (see Note I to the Company's consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q).

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") describes the principal factors affecting results of operations, liquidity and capital resources, and critical accounting policies of the Company. This discussion should be read in conjunction with the accompanying quarterly unaudited condensed consolidated financial statements and the Company's Annual Report on Form 10-K for the year ended December 31, 2011. The Company's 2011 Annual Report on Form 10-K includes additional information about significant accounting policies, practices and the transactions that underlie the Company's financial results, as well as a detailed discussion of the most significant risks and uncertainties to which its financial and operating results are subject. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain reclassifications have been made to the financial and operational results presented in the March 31, 2011 Form 10-Q to conform to the current year's presentation of reportable operating segments.

Results of Operations

Consolidated Results

OPERATING REVENUES
Freight Transportation                                      $     400,555    $   397,272
Truck Brokerage and Management                                      8,039          5,100
Emergency and Preventative Maintenance                             22,378         22,277
Special Services Logistics                                         15,052         15,871
Other and eliminations                                             (5,157 )       (5,589 )
Total consolidated operating revenues                       $     440,867    $   434,931

OPERATING INCOME (LOSS)
Freight Transportation                                      $     (21,977 )  $   (23,058 )
Truck Brokerage and Management                                        394            385
Emergency and Preventative Maintenance                               (137 )          922
Special Services Logistics                                           (792 )          137
Other and eliminations                                               (475 )         (378 )
Total consolidated operating loss                           $     (22,987 )  $   (21,992 )

NET LOSS ATTRIBUTABLE TO ARKANSAS BEST CORPORATION          $     (18,162 )  $   (12,808 )

DILUTED LOSS PER SHARE                                      $       (0.71 )  $     (0.51 )

Consolidated revenues for the three months ended March 31, 2012 increased 1.4% compared to the same prior year period, primarily reflecting higher revenues reported in the Freight Transportation and Truck Brokerage and Management segments. Freight Transportation revenues, which represented 91% of the Company's first quarter 2012 consolidated revenues, were consistent on a per-day basis with first quarter 2011 revenues. Freight Transportation revenues reflect an 11.5% increase in billed revenue per hundredweight, including fuel surcharges, offset by a 10.6% decrease in tonnage per day.

The Company's first quarter 2012 and first quarter 2011 consolidated operating losses and net losses per common share primarily represent the operating results of ABF reported as the Freight Transportation Segment. The consolidated operating loss for the three months ended March 31, 2012, totaled $23.0 million compared to an operating loss of $22.0 million in the comparable prior year period. The change in operating loss primarily reflects the operating results of the Company's non-asset-based operating segments of Emergency and Preventative Maintenance and Special Services Logistics, as further discussed in the Non-Asset-Based Segments section of Results of Operations. The Company's first quarter 2012 year-over-year operating results were impacted by certain items that did not change in accordance with business levels, most significantly the lower tonnage per day experienced by the Freight Transportation segment.

For the three months ended March 31, 2012, the following items impacted the year-over-year consolidated operating loss comparison:

† $5.3 million increase in workers' compensation claims costs. These costs in the Freight Transportation segment were above the ten-year historical average as a percent of revenue due to increased severity on new and existing claims and the impact of unfavorable experience on the ultimate expected development of claims. Workers' compensation claims costs are accrued when claims are incurred, and, as a result, associated expense may fluctuate depending on the frequency or severity of claims incurred from period to period. Therefore, the higher level of workers' compensation claims costs in first quarter 2012 is not indicative of future costs.

† $4.8 million increase in costs associated with sales, customer service and information technology. The Company is investing in additional sales personnel and information technology to enhance customer service levels at ABF and to more fully develop the Company's non-asset-based businesses.

† $1.7 million increase in pension and retirement expenses. The increase in pension and retirement expenses includes higher expenses for the Company's nonunion defined benefit pension plan resulting from a historically low discount rate used to remeasure plan obligations at December 31, 2011 and lower than expected returns on pension investments in 2011.

† $1.4 million increase in depreciation expenses, primarily in the Freight Transportation segment. Depreciation expense increased in first quarter 2012 due to a higher number of road tractors and trailers acquired in 2011, including higher per unit costs. As reported in the 2011 Form 10-K, full year 2012 consolidated depreciation expenses are expected to be in a range of $80.0 million to $85.0 million compared to $73.7 million in 2011.

† $1.6 million decrease in third-party casualty claims costs, primarily in the Freight Transportation segment. While third-party casualty claim costs for the first quarter 2012 were in-line with historical levels as a percent of revenues, these costs in the first quarter of 2011 were negatively impacted by the severity of claims.

In addition to the above items, the consolidated net loss comparison for the three months ended March 31, 2012 versus the same period of 2011 was impacted by the following:

† $1.3 million lower income from changes in the cash surrender value of life insurance policies. A portion of the Company's cash surrender value of variable life insurance policies have investments, through separate accounts, in equity and fixed income securities and, therefore, are subject to market volatility. The Company recognized gains associated with changes in the cash surrender value and proceeds from life insurance policies of $1.3 million in other income within the consolidated statement of comprehensive income for the three months ended March 31, 2012, compared to gains of $2.6 million for the same prior year period.

† Consolidated net loss was negatively impacted by a reduction in the effective tax benefit rate from 36.5% in first quarter 2011 to 19.4% in first quarter 2012. The first quarter 2012 effective tax benefit rate was below historical levels because of limitations on the amount of deferred tax assets that could be recorded during the quarter.

Freight Transportation Segment: ABF Overview

ABF's operations are affected by general economic conditions, as well as a number of other competitive factors that are more fully described in the Business and Risk Factors sections of the Company's 2011 Annual Report on Form 10-K. The key indicators necessary to understand ABF's operating results include:

†          the overall customer demand for ABF's freight transportation
services;

†          the volume of transportation services provided by ABF, primarily

† the prices ABF obtains for its services, primarily measured by yield ("revenue per hundredweight"), including fuel surcharges; and

† ABF's ability to manage its cost structure, primarily in the area of salaries, wages and benefits ("labor"), with the total cost structure measured by the percent of operating expenses to revenue levels ("operating ratio").

ABF's operating performance is generally evaluated by comparison to the same prior year periods due to seasonal fluctuations which affect tonnage and shipment levels. The key performance factors and operating results of ABF are discussed in the following paragraphs.

For the three months ended March 31, 2012, ABF's revenue on a per-day basis was consistent with the same period in 2011, but reflected an increase in billed revenue per hundredweight, including fuel surcharges, offset by a decrease in tonnage levels compared to the same prior year period. ABF's first quarter 2012 operating ratio improved slightly to 105.5% from 105.8% in first quarter 2011. The ABF key performance factors and operating results are discussed in the following paragraphs.

Tonnage

ABF's tonnage levels for the three months ended March 31, 2012 decreased 10.6% on a per-day basis compared to the same prior year period even though the first quarter of 2011 was negatively impacted by severe weather conditions. ABF has experienced decreases in year-over-year quarterly tonnage comparisons since the third quarter of 2011. The year-over-year tonnage declines have been impacted by ABF's initiatives to improve account profitability, which led to increases in billed revenue per hundredweight for the same periods, the effect of moderating general economic conditions and comparison to significant tonnage growth experienced in the second half of 2010 through the first quarter of 2011. Although tonnage levels on a per-day basis for the first quarter of 2012 are 7% to 8% above the same periods of 2010 and 2009, during which time ABF experienced a severe freight recession, tonnage per day remains 11.6% below first quarter 2008 levels. During periods of significant tonnage declines, a larger proportion of ABF's network costs become fixed in nature when maintaining service levels. The impact of general economic conditions and ABF's pricing initiatives, as further discussed in the following Pricing section of the ABF Overview, may continue to impact ABF's tonnage levels and, as such, there can be no assurances that ABF will achieve improvements in its current operating results. For the month of April 2012, average daily total tonnage for ABF decreased approximately 9% compared to April 2011 when ABF experienced a year-over-year improvement in tonnage of 16.3%. On a per-day basis, tonnage for April 2012 increased approximately 4% to 5% over March 2012 levels, resulting in the best sequential tonnage trend ABF has experienced between these periods in over 20 years. ABF's revenues for the month of April 2012 were approximately 3% to 4% below April 2011, reflecting the lower tonnage levels partially offset by an increase in billed revenue per hundredweight, including fuel surcharges.

Pricing

Another key to ABF's operating performance is the industry pricing environment which influences ABF's ability to obtain appropriate margins and price increases on customer accounts. Externally, ABF's pricing is typically measured by billed revenue per hundredweight, which is a reasonable, although approximate, measure of price change. Generally, freight is rated by a class system, which is established by the National Motor Freight Traffic Association, Inc. Light, bulky freight typically has a higher class and is priced at a higher revenue per hundredweight than dense, heavy freight. Changes in the rated class and packaging of the freight along with changes in other freight profile factors such as average shipment size,

average length of haul, freight density and customer and geographic mix, can affect the average billed revenue per hundredweight measure. Since pricing is established individually by account, ABF focuses on individual account profitability rather than billed revenue per hundredweight when considering customer account or market evaluations. This is due to the difficulty of quantifying, with sufficient accuracy, the impact of changes in freight profile characteristics, which is necessary in estimating true price changes. Obtaining overall base rate increases involves a lengthy process to address the pricing and resulting profitability of individual customer accounts. In addition, industry pricing has been negatively impacted during the recent recessionary periods of lower available tonnage, particularly in 2010 and 2009, when pricing became a primary driver of competition as many carriers attempted to either gain market share or minimize tonnage losses through price discounting. Pricing on ABF's traditional less-than-truckload ("LTL") business was adversely impacted during this time in which ABF was not able to adequately secure base LTL rate increases. Prolonged periods with insufficient base LTL rate improvements result in higher operating ratios as elements of unit cost, including contractual wage and benefit rates, continue to increase. Since the second quarter of 2011, ABF has experienced improvement in the overall pricing environment.

Approximately 45% of ABF's business is subject to ABF's base LTL tariffs, which are affected by general rate increases, combined with individually negotiated discounts. Rates on the other 55% of ABF's business are subject to individually negotiated pricing arrangements that are effective at various times throughout the year. The majority of the tonnage related to this business is associated with larger customer accounts with annually negotiated contracts. The remaining individually negotiated pricing arrangements are priced in the market considering their unique freight profile and based on value provided by ABF to the customer. Effective July 25, 2011 and October 1, 2010, ABF implemented nominal general rate increases on its LTL base rate tariffs of 6.9% and 5.9%, respectively, although the amounts vary by lane and shipment characteristics. For the three month period ended March 31, 2012, prices on accounts subject to annually negotiated contracts increased an average of approximately 5.0% compared to the same period of 2011.

Total billed revenue per hundredweight increased 11.5% during the three months ended March 31, 2012, compared to the same period of 2011. The revenue per hundredweight measure is significantly impacted by fuel surcharges and changes in freight profile factors as further discussed in ABF Results within the Freight Transportation Segment section of Results of Operations. Excluding changes in fuel surcharges and freight profile, the percentage increase in average pricing on ABF's traditional LTL business for the first quarter 2012 was in the mid- to high-single digits compared with the same period of 2011. The pricing improvement was influenced by substantial retention of the July 2011 general rate increase and improvements in contractual and deferred pricing agreements previously mentioned. ABF continues its efforts to increase pricing on underperforming accounts and to adjust inadequate fuel surcharge programs, including transitioning certain nonstandard arrangements to base LTL freight rates. Management believes the actions ABF has taken to improve pricing on existing accounts have had a significant impact on tonnage levels experienced in the first quarter of 2012. There can be no assurances that the current price improvement trend will continue or that efforts to improve pricing will offset the impact of tonnage losses on ABF's operating results. A competitive environment could limit ABF from securing adequate increases in base LTL freight rates and could limit the amount of fuel surcharge revenue recovered.

Fuel

The transportation industry is dependent upon the availability of adequate fuel supplies. The Company has not experienced a lack of available fuel but could be adversely impacted if a fuel shortage develops. ABF charges a fuel surcharge based on changes in diesel fuel prices compared to a national index. The ABF fuel surcharge rate in effect is available on the ABF Web site at abf.com. (The information contained on the ABF Web site is not a part of this Quarterly Report on Form 10-Q nor shall it be deemed incorporated by reference into this Quarterly Report on Form 10-Q.) Although revenues from fuel surcharges generally more than offset direct diesel fuel costs, other operating costs have been, and may continue to be, impacted by fluctuating fuel prices. The total impact of energy prices on other nonfuel-related expenses is difficult to ascertain. ABF cannot predict, with reasonable certainty, future fuel price fluctuations, the impact of energy prices on other cost elements, recoverability of fuel costs through fuel surcharges and the effect of fuel surcharges on ABF's overall rate structure or the total price that ABF will receive from its customers. During periods of changing diesel fuel prices, the fuel surcharge and associated direct diesel fuel costs also vary by different degrees. Depending upon the rates of these changes and the impact on costs in other fuel- and energy-related areas, operating margins could be impacted. Fuel prices have fluctuated significantly in recent years. The weekly retail on-highway diesel price per gallon, including taxes, published by the U.S. Department of Energy decreased from a high of $4.76 in July 2008 to a low of $2.02 in March 2009 and increased

in subsequent periods to a March 2012 average price of $4.13. Whether fuel prices fluctuate or remain constant, ABF's operating income may be adversely affected if competitive pressures limit its ability to recover fuel surcharges. While the fuel surcharge is one of several components in ABF's overall rate structure, the actual rate paid by customers is governed by market forces based on value provided to the customer.

Throughout the first three months of 2012, the fuel surcharge mechanism generally continued to have market acceptance among ABF customers; however, certain nonstandard pricing arrangements have limited the amount of fuel surcharge recovered. The negative impact on operating margins of capped fuel surcharge revenue during periods of increasing fuel costs is more evident as fuel prices remain above the maximum levels recovered through the fuel surcharge mechanism on certain accounts. ABF's pricing initiatives, including the transition of certain nonstandard arrangements to base LTL freight rates, have lessened the effect of inadequate fuel surcharge programs. However, there can be no assurances that ABF's operating results will not be impacted by further changes in fuel prices.

Labor Costs

ABF is generally effective in managing its costs to business levels. ABF's ability to effectively manage labor costs has a direct impact on its operating performance. These costs, which are reported in ABF operating expenses and costs as salaries, wages and benefits, amounted to 66.3% and 66.0% of ABF's revenue for the three months ended March 31, 2012 and 2011, respectively. Labor costs, including retirement and health care benefits for ABF's contractual employees that are provided by a number of multiemployer plans (see Note E to the Company's consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q), are impacted by ABF's contractual obligations under its labor agreement primarily with the International Brotherhood of Teamsters (the "IBT"). This five-year collective bargaining agreement, the National Master Freight Agreement (the "NMFA"), became effective April 1, 2008 and provides for compounded annual contractual wage and benefit increases of approximately 3% to 4%, subject to additional increases for cost-of-living adjustments, as further discussed in ABF Results within the Freight Transportation Segment section of Results of Operations. The contractual wage rate increase effective primarily on April 1, 2012 under the NMFA averaged 1.9%. Contractual health, welfare and pension benefit rates under the NMFA are scheduled to increase by an average of 6.3% primarily on August 1, 2012. The total ABF increase in health, welfare and pension benefit costs on August 1, 2012 could be lower if the Central States, Southeast and Southwest Area Pension Fund requests no increase in the contribution rate, which would be consistent with the rate requested effective August 1, 2011.

ABF operates in a highly competitive industry which consists predominantly of nonunion motor carriers. The Company's nonunion competitors have a lower fringe benefit cost structure, and certain carriers also have lower wage rates for their freight-handling and driving personnel. Wage and benefit concessions granted to certain union competitors also allow for a lower cost structure than that of ABF. Furthermore, ABF's labor costs are impacted by its contributions to multiemployer plans which are used to pay benefits to individuals who were never employed by ABF. Information provided by a large multiemployer pension plan indicates that more than 40% of the plan's benefit payments are made to retirees of companies that are no longer contributing employers. During recent recessionary economic conditions, competitors with lower labor cost structures reduced freight rates to gain market share, which further limited ABF's ability to maintain or increase base freight rates to sufficient levels in recent years. ABF has continued to address with the IBT the effect of ABF's wage and benefit cost structure under the NMFA on its operating results.

On November 1, 2010, ABF Freight System, Inc. filed a grievance with the National Grievance Committee, consisting of union and employer representatives established by the NMFA for resolving national contract disputes, against the following parties: the IBT; the Teamsters National Freight Industry Negotiating Committee; Trucking Management, Inc. ("TMI"); every Teamster Local Union that is party to the NMFA; and YRC Inc., New Penn Motor Express, Inc. and USF Holland, Inc. (collectively "YRC"). A lawsuit was simultaneously filed with the United States District Court for the Western Division of Arkansas (the "Trial Court") against the parties previously named and Teamsters Local Unions 373 and 878 individually and as representatives of a class of Teamsters Local Unions that are parties to the NMFA. The lawsuit seeks appointment of a third party neutral tribunal to rule on the grievance in place of the National Grievance Committee or, alternatively, for the Trial Court to rule on the lawsuit.

The grievance and lawsuit assert that ABF Freight System, Inc. is an equal signatory to the NMFA which, as a national collective bargaining agreement, is designed to establish a single national standard for wages and other employment terms

for all employees who are parties to the agreement. However, ABF Freight System, Inc. has not been granted the same wage and benefit concessions under the NMFA as YRC since 2009. The grievance filed by ABF Freight System, Inc. is a claim that the IBT and the other named parties have violated the NMFA. The grievance and lawsuit seek to declare the amendments made to the NMFA on behalf of YRC null and void. The grievance and lawsuit also seek payment for damages associated with the amendments made on behalf of YRC.

On December 20, 2010, the Trial Court granted motions filed by the IBT, the Teamsters National Freight Industry Negotiating Committee, Teamsters Local Unions 373 and 878 and, separately, by YRC to dismiss the lawsuit for lack of subject matter jurisdiction. On January 18, 2011, ABF Freight System, Inc. filed an appeal in the United States Court of Appeals for the Eighth Circuit (St. Louis) (the "Court of Appeals"). On April 12, 2011, the Court of Appeals held a hearing regarding the dismissal of the lawsuit and oral arguments were presented on behalf of ABF Freight System, Inc. On July 6, 2011, the Court of Appeals reversed the Trial Court's decision and remanded the case to the Trial Court for further proceedings. On October 12, 2011, ABF Freight System, Inc. filed an amended complaint. On November 11, 2011, the IBT, TMI and YRC filed Motions to Dismiss this amended complaint and on December 9, 2011, ABF Freight System, Inc. filed a response to the defendants' Motions to Dismiss. On January 16, 2012, the IBT, TMI and YRC filed reply briefs to the response filed by ABF Freight System, Inc. On January 23, 2012, the IBT filed a request for oral arguments, which was supported by the other parties to the lawsuit. Although the outcome of the continued legal proceedings cannot be predicted at this time, ABF Freight System, Inc. will continue to pursue the legal actions and damages which management believes are necessary for ABF to achieve an equitable cost structure and to compete effectively in the LTL industry.

Freight Transportation Segment: ABF Results

The following table sets forth a summary of operating expenses and operating loss as a percentage of revenue for ABF:

                                          Three Months Ended
                                               March 31
                                           2012         2011

ABF OPERATING EXPENSES AND COSTS

Salaries, wages and benefits                 66.3 %       66.0 %
Fuel, supplies and expenses                  20.2         19.9
Operating taxes and licenses                  2.7          2.9
Insurance                                     1.2          1.6
Communications and utilities                  0.9          1.0
Depreciation and amortization                 4.6          4.3
Rents and purchased transportation            9.2          9.7
Gain on sale of property and equipment       (0.1 )          -
Other                                         0.5          0.4
                                            105.5 %      105.8 %

ABF OPERATING LOSS                           (5.5 )%      (5.8 )%

. . .