(Pictured on cover Premium Service, Value-Added Technology and Motivated
Professionals omitted)
<PAGE>
      OTR Express achieved a 73% increase in net income in 1998,
         benefiting from the second year of a Five Year Plan
          for long-term growth and improved profitability.

           As a premium service truckload carrier, OTRX has 
    expanded its capabilities to include dedicated service for national 
         accounts, intermodal logistics, service to Mexico and 
            regional truckload fleets in three key areas.


    OTRX technology gives customers valuable supply-chain data, enhances 
            operating efficiency and equipment management, 
              and enables us to reward driver/managers 
                   for superior profitability.


   The leadership commitment of OTRX in customer service and technology has 
            generated double-digit growth in revenues, 
       while improving operating efficiency and profit margins.




        Table of Contents
Highlights                                   1
Letter from the Chairman and President       3
OTRX - Positioned for the Future             7
OTRX Employees - Motivated to Succeed        8
OTRX Technology - A Competitive Advantage   10
Selected Financial Data                     11
Management's Discussion and Analysis of 
 Financial Condition and Results of
 Operations                                 12
Report of Independent Public Accountants    17
Financial Statements                        18
Directors and Officers                      29
Quarterly Financial Data                    30
Stockholder Information                     32

   On the cover from left to right:  OTR Express, Inc. Driver/Manager  
Jerry Sheckler and Equipment Inspector Lee Samuel; Driver/Manager J.D. 
Benbow; Operations Supervisor Mike Blankenship and Manager - Corporate 
Accounts Amy Wilmes-Brown 
<PAGE>
(Graphs-five year historieof various operating statistics omitted)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
(In thousands except per share data)
                           1998       1997       1996       1995      1994
<S>                       <C>        <C>        <C>        <C>       <C>      
Income Statement Data                                 
Operating revenue          $72,284    $63,797    $55,261    $49,211   $42,760   
Operating income             4,766      4,090      2,195      2,029     3,648   
Net income (loss)              883        509       (368)      (157)    1,278   
                                 
Outstanding shares           1,836      1,840      1,836      1,830     1,825   
Earnings (loss) per
 share - basic and
 diluted                   $  0.48    $  0.28    $ (0.20)   $ (0.09)  $  0.70   
                                 
Operating ratio (1)           93.4%      93.6%      96.0%      95.9%     91.5% 
                                 
                                 
Balance Sheet Data                                 
Current assets             $10,011    $ 9,223    $ 7,681     $ 6,799  $ 6,109   
Current liabilities         18,271     18,140     19,152      17,187   10,781   
Total assets                59,220     56,034     50,576      48,883   36,720   
Current portion of
 long-term debt             13,837     14,260     15,751      13,968    7,913
Long-term debt, less 
 current portion            28,658     26,688     21,019      20,844   14,595   
Stockholders' equity         9,891      9,346      8,805       9,156    9,301   

(1) Operating expenses as a percentage of operating revenue


Operational Highlights
                           1998        1997       1996        1995     1994   
                                 
Total miles (in
 thousands)                64,216      58,253     52,330      47,197   40,279   
Average number of
 tractors                     583         525        506         450      345   
Revenue per loaded mile   $ 1.165     $ 1.121    $ 1.066     $ 1.031  $ 1.041   
Revenue per mile          $ 1.060     $ 1.036    $ 0.996     $ 0.963  $ 0.983   
                                 
Miles per week per truck    2,119       2,135      1,984       2,015    2,247   
Empty miles percentage        9.0%        7.6%       6.6%        6.6%     5.6% 
Miles per load              1,120       1,332      1,464       1,506    1,576 
                                 
Employees - end of
 period                       650         642        559         575      464   
Licensed tractors -
 end of period                526         526        503         503      394   
Owner operators -
 end of period                 47          10          -           -        -   
Total tractors -
 end of period                573         536        503         503      394   
                                 
Licensed trailers -
 end of period              1,042         765        608         567      449   
Average equipment
 age (years)                                 
   Tractors - end of
    period                   2.43        1.97       1.82       1.23      1.50   
   Trailers - end of
    period                   1.93        1.53       1.88       3.05      2.92   
                                 



</TABLE>
<PAGE>
(Picture of Chairman Bill Ward and CEO Gary Klusman omitted) 
OTR Express Chairman Bill Ward and
President and CEO Gary Klusman

To Our Stockholders:

We are very proud of the operating trends,
freight statistics and financial results OTR Express achieved in 1998.  
Even more important than our strong numbers are the milestones we 
reached in implementing the company's marketing strategy during the 
second year of our Five Year Plan for OTRX.  First, however, here is a 
summary of financial performance for the past year.

Improved 1998 Results 

Financial results for 1998 showed strong improvement on top of progress 
made in 1997.  Revenues increased 13% to $72.3 million in 1998.  
Operating income increased 17% to $4.8 million.

Net income and earnings per share improved by 73% in 1998. 

OTRX earned $883,000 in 1998, compared to 
$509,000 in 1997 and a net loss of $368,000 in 1996. From a net loss of 
20 cents per share in 1996, we generated net earnings of 28 cents in 
1997 and 48 cents in 1998.

This two-year improvement in earnings is very encouraging for future 
growth and profitability.  

Revenue per unit per week improved to $2,246 in 1998 from $2,212 in 1997 
and $1,975 in 1996.  Our transition plan has increased revenue per mile 
to $1.060, from $1.036 in 1997 and $0.996 in 1996.

Miles obtained directly from shippers increased to 83% of the total in 
1998, from 77% in 1997 and 61% in 1996.  A goal of the Five Year Plan is 
to reduce reliance on freight brokers to below 10% of total miles, which 
is within reach in 1999.


Five Year Plan

In late 1996, OTRX initiated a Five Year Plan as a platform for long-
term growth and improved profitability, with three major objectives:

(1) Develop OTRX into a premium service truckload carrier to become a 
core carrier for larger, national account customers.

(2) Transition our customer base from price-driven brokers and shippers 
to customers who need premium service truckload carriers to add value to 
their supply chain management.

(3) Expand into non-asset based transportation market segments where we 
can capitalize on our core business and computer technology advantages 
to compete effectively.

OTRX achieved excellent progress in 1998 as we continued to implement 
the Five Year Plan.  In the first two years of the plan, operating 
income has grown by 117%, from $2.2 million in 1996 to $4.8 million in 
1998.
<PAGE>


Expanding Our Service Capabilities

We now offer transportation service capabilities focused on improving 
our customers' supply chain management and operational profitability.  
Going beyond truckload freight services, we now offer transportation and 
logistics solutions.

We expanded our service capabilities in 1998 to include:

   Rail, ocean, air freight and less-than-truckload service.

   Service to Mexico through a strategic alliance partner.

   170% expansion of the drop trailer fleet for more efficient loading.

   Initiation of short haul service in Chicago, Dallas and Houston.

   Expansion of electronic data interchange (EDI), including automated 
   load tender from customers.

In addition, we began offering dedicated service to our customers in 
1998, a potentially significant growth opportunity for OTRX.  We create 
value for our customers by dedicating specific drivers, equipment, 
support staff and systems 100% to fill a customer's specialized needs.  
These contracts offer premium service, with guaranteed equipment, time-
definite service and specialized equipment to provide the optimum 
transportation solution.
   
   


(Picture of OTR Vice Presidents omitted)

      OTR Vice Presidents      
      Front row:Paul MacNaughton, Kathy Ward, Steve Ruben
      Carolyn Davidson, Chris Schowengerdt   
      Back row: Eric Janzen, Gary 
      Hinkle, Marc Hirschmann, 
      Chip Seitz, Jeff Brown
      (Not pictured: David Caldwell)   


Targeted Customer Base

We continue to make progress in modifying our customer base by adding 
national account shippers that meet our target market criteria.  We 
initiated service to one of the largest beverage companies in the world 
in late 1997, providing high levels of equipment availability and a 
cost-effective loading program for nine facilities nationwide.  As a 
result, this company became our largest shipper in 1998.

Michaels(r) Stores, Inc., the arts and crafts retailer, began with OTRX 
by testing our ability to provide equipment in difficult areas on short 
notice.  After only two years as a customer, Michaels(r) became our 
third-largest shipper in 1998, with over 1,500 loads.

This type of dedicated response to service customers will become the 
catalyst for successfully marketing the company's national account 
program into the new millennium.  By creating value for these customers, 
we will build relationships that will be the foundation for 
accomplishing the goals of the Five Year Plan.


Non-Asset Based Revenues

A key to the success of the Five Year Plan is the development of non-
asset based markets
<PAGE>

that offer revenue and operating income opportunities without the need 
for additional equipment and debt.  These market segments also go a long 
way toward improving our return on equity.


The company entered the non-asset based logistics markets with both feet 
in October 1998 by introducing the OTR Logistics Rail Division, based in 
Salt Lake City.  

The new Rail Division is an excellent fit for the company's Five Year 
Plan, providing an opportunity to capitalize on our marketing network 
and computer system advantages.

We were fortunate to have Chuck McIntyre join OTRX to manage the Rail 
Division.  Chuck has a proven track record in the rail logistics 
industry and a very innovative approach.  We have used our MIS 
capabilities to develop rail logistics 
systems for effective load management.
The new systems are designed to maximize profit margins by providing 
efficient access to historical data on lanes, carriers and profit 
percentages.  In addition, the systems provide high level load status 
information for real time reporting to customers - creating value for 
customers managing inventory and production schedules.

Currently staffed with eleven professionals and supported by our full 
marketing network, this division sees exciting opportunities ahead.


Responsible Governance

Your Board of Directors is committed to the concept of best practices 
and will continue to modify the Board structure to improve our ability 
to represent stockholders more effectively and professionally.  We 
implemented many significant changes in 1998.

The Board voted to pursue a minimum of 
50% independent Board members with a target date of May 2001.  All but 
one of our Board members, excluding the chief executive officer, are now 
assigned to chair a committee. 

In 1998, our Board members began attending the National Association of 
Corporate Directors best practice seminars for board members of public 
companies on a rotating basis.

Our goal is to provide realistic and meaningful oversight and policy 
guidelines to management yet avoid becoming intrusive.  We will continue 
to work to achieve this goal.


Clear Future Directions

Our commitment and focus is to create value for our stockholders.  We 
believe our Five Year Plan is the best strategy to make this happen.

The progress we have made during the first two years of the Five Year 
Plan is very encouraging, the trends are strong and the necessary 
ingredients are in place.

We still have a long way to go to achieve our long-term objectives.  We 
will strive to continue our progress and devote our energies to 
developing a platform for long-term growth and profitability.  Thank you 
for your continued support and interest in OTR Express.

Please visit us at our new website, www.otrx.com.

Sincerely,



/s/ William P. Ward     /s/ Gary J. Klusman
William P. Ward         Gary J. Klusman
Chairman                President and CEO

<PAGE>



     Premium service creates a "win-win" for OTR Express and our national 
     accounts, including timely, customized loading and high-technology 
                       logistical support.
(Picture of OTR truck omitted)

OTRX - Positioned for the Future

OTR Express has positioned itself in the past three years to take 
advantage of growth opportunities we see in the transportation industry.  
We have invested in several areas to better serve our customers and to 
maintain the most experienced, safety-conscious driver fleet in the 
industry.

Exceeding Customer Expectations

When asked to comment about OTR Express, here's what a few of our 
customers had to say:

"OTRX does a great job for us.  Thank you
for all the service you have given us."
"What I like best about OTR is its reliability and on time service."
"I like OTR's courteous and professional drivers."
"OTR provides up-front communication,  with few surprises."

In 1998, OTRX took several steps to further enhance our position as a 
premium service provider to larger national accounts.

   Regional teams - In 1998, we reorganized our national fleet 
dispatch, customer service and sales personnel into teams responsible 
for freight movements out of designated regions.  To augment that 
concept, we added regional sales managers in Dallas, Boston and Atlanta.  
We expect to add more regional sales managers around the country in 
1999, working with other team members to add new shippers and increase 
freight opportunities with current customers in target areas.  

   Expansion of trailer fleet - We added 277 trailers in 1998 to 
enhance drop-and-hook opportunities and minimize downtime for our 
drivers.  Our goal is to convert 70% of our freight to drop-and-hook 
loads by the year 2000.  

   Additional trailer drop lots - In 1998, we added trailer drop lots 
in Chicago, Dallas, Los Angeles and St. Joseph, Missouri, to more 
centrally locate our loaded and unloaded trailers so that drivers do not 
have to wait as long at shippers in those cities.  This enables us to 
move freight more efficiently in and out of customer locations.

   Expansion of regional service - OTRX expanded our regional short 
haul fleet (less than 500 miles per load) in 1998 to take advantage of 
the high volume of shorter runs available from customers.  Adding 
regional service enables us to capture more of each customer's freight, 
since many shippers have both long and short haul needs.  

    Truck brokerage - Our truck brokerage division coordinates movement 
of freight for which OTRX trucks are not available.  The division works 
with a database of more than 900 carriers who can utilize their own 
equipment to move the freight.  In 1998, OTRX added staff to take 
advantage of the additional freight opportunities created by our 
marketing staff.

   Intermodal logistics - In October 1998, OTRX added a logistics rail 
division to move freight using the rail mode of transport. This new 
department contracts with rail carriers to move freight for customers.  
Based in Salt Lake City, the rail division currently employs eleven 
professionals.  The logistics rail division will not require the 
purchase of additional equipment, so it will operate as a non-asset 
based transportation provider.

   Owner operators -  OTRX began the owner operator program in October 
1997 to expand our fleet and meet customer needs without the fixed cost 
of adding additional trucks.  In 1998, we increased the number of owner 
operators from ten to 47, and we expect to continue to expand the owner 
operator fleet in 1999.
<PAGE>     
OTRX Employees - 
Motivated to Succeed

Each of our 650 OTR Express employees - from maintenance personnel who 
inspect the trucks, to drivers who deliver products to the customer, to 
billing clerks who ensure that the invoice is accurate - plays a key 
role in meeting and exceeding customers' expectations.


Equipment Managers -
Key to Safety and Customer Service

At OTR, we have recognized the importance of quality, experienced 
driver/managers.  In any trucking company, the drivers are the front 
line contact point with customers.  We have more experienced, 
professional drivers than other truckload carriers.  Our drivers average 
46 years of age and 13 years of driving experience.  

To attract and retain drivers, we pay a premium wage, treat drivers as 
business partners and provide equipment they are proud to drive.  We 
believe our 71% driver turnover rate in 1998 is one of the best in the 
truckload industry, where many trucking companies have turnover of more 
than 100% annually.


   Driver/Manager Pay - During 1998, we invested in the quality of our 
fleet by increasing driver pay more than 9%.  Our customers have come to 
expect the high level of service and professionalism that OTRX drivers 
offer.  By raising the drivers' pay, we can remain at the top of the pay 
scale in the truckload industry to attract and retain qualified drivers.


   Incentive-based Pay - Mileage pay at OTRX is based on fuel 
efficiency achieved by a driver/manager.  Above-average fuel economy is 
rewarded with premium mileage pay.  Our driver/managers have an 
incentive to run equipment at efficient speeds, reduce out-of-route 
miles, idle less and maintain trucks in peak condition.


   Profit Centers - OTRX maintains each truck as a separate profit 
center and provides driver/managers with profit center results, which 
include actual revenues and expenses of the equipment and fixed expense 
components for administration, taxes and depreciation.  OTRX pays a 
percentage of company profits each quarter to drivers who show a profit 
on their trucks.

   Safety first - We offer driver/managers bonuses for driving their 
trucks accident-free.  Each year a driver/manager goes accident-free, 
the bonus increases. 


Professional Staff - 
Teamwork and Dedication

At OTRX, we understand the business benefits of cultivating a talented 
professional staff.  Our  staff members have the opportunity to share in 
the success of OTRX through incentive-based performance rewards based on 
revenue per truck goals.  Our more than 130 professionals work as teams 
to identify critical issues and implement creative solutions.

We strive to have a quality work environment where our employees have 
opportunities to be challenged and to advance within the organization.  
Our employees focus on continuous improvement and innovation.  To reward 
innovation and creativity, OTRX provides financial incentives to 
employees for ideas that are implemented and for excellent customer 
service. 
<PAGE>


            People make the difference for OTR Express.
             Experienced driver/managers backed by a
            talented professional staff provide superior
                  service to our customers.
(Picture of Customer Service Representative omitted)
<PAGE>

OTRX Technology -  
A Competitive Advantage

Because we utilize proprietary software internally developed exclusively 
for OTRX, we can respond more quickly to changing customer needs.  Our 
management information services (MIS) team spends considerable time with 
customers and our sales personnel evaluating the best ways to serve 
customer needs in billing, payment and load information.

The MIS department also is continually designing state-of-the-art 
software to enable OTRX to maintain a tractor to staff ratio of more 
than 4 to 1 (a key measure of operating efficiency) in an industry where 
3 to 1 is considered excellent.

Significant Strides in 1998

Our MIS team completed more than 170 projects in 1998.  A small sampling 
of completed projects:

   New website - www.otrx.com opened in mid-1998 and has been an 
excellent tool for customers, investors, prospective new employees and 
owner operators to learn about OTRX and communicate with us via the 
World Wide Web.

   Electronic mail - Since implementing e-mail in 1998, we have 
developed focused distribution lists to speed up communication of 
critical business issues.  Via e-mail, we communicate with employees, 
customers and vendors in multiple locations.

   Logistics rail division - Our  programmers developed a proprietary 
load order system specifically for logistics rail service.  This new 
system is integrated with our current freight optimization system and 
has substantially improved the division's efficiency.

   Customer freight summary - MIS worked with the dispatch and sales 
departments to identify five critical freight characteristics and weight 
them to evaluate the relative profitability of customers out of each of 
129 geographic marketing areas.

   Maintenance downtime report - We utilize this report to move trucks 
through our maintenance facility more quickly for routine maintenance 
and inspections.

   Equipment management system - We have detailed information on each 
tractor and trailer in the fleet, enabling our dispatchers to rapidly 
identify types of equipment to effectively serve customers.

MIS - Looking Ahead to 1999

Some significant projects our MIS team has planned for 1999 include: 

   Conversion to new database server - We are in the process of 
converting to an Oracle SQL database server to speed up processing  
times for virtually all non-accounting applications.  In addition to 
providing a more robust database engine, the new system is scalable and 
will enable us to expand the system more easily to accommodate future 
growth.

   Load order status on website - Starting in 1999, we plan to enable 
customers to obtain load status information through our website.  Using 
secure identification, they will be able to obtain real time load 
location reports from Qualcomm onboard communications systems installed 
on each of our trucks.

   EDI (electronic data interchange) - Our MIS department is working 
toward conversion of more customers to EDI to provide customers with 
load status information and their invoices more quickly via 
telecommunication lines.
<PAGE>
<TABLE>
Selected Financial Data
<CAPTION>
(In thousands except per share data)
                            1998      1997      1996      1995      1994
<S>                        <C>       <C>       <C>       <C>       <C>        
INCOME STATEMENT                              
Operating revenue           $72,284   $63,797   $55,261   $49,211   $42,760
Operating expenses                              
    Salaries, wages and
     benefits                28,129    25,549    22,395    19,837    15,912
    Purchased
     transportation           7,891     3,757     2,930     2,402     2,094
    Fuel                      5,691     7,632     7,011     5,511     4,546
    Maintenance               4,725     3,654     3,310     3,005     2,648
    Depreciation              7,437     7,401     6,723     6,517     5,243
    Insurance and claims      1,908     1,882     1,639     1,594     1,738
    Taxes and licenses        6,899     6,124     6,048     5,541     4,684
    Supplies and other        4,839     3,708     3,010     2,775     2,247
        Total operating
         expenses            67,519    59,707    53,066    47,182    39,112
Operating income              4,765     4,090     2,195     2,029     3,648
Interest expense              3,351     3,269     2,789     2,283     1,449
Income (loss) before
 income taxes                 1,414       821      (594)     (254)    2,199
Income tax expense (benefit)    531       312      (226)      (97)      921
Net income (loss)           $   883   $   509   $  (368)  $  (157)  $ 1,278
Outstanding shares
    Basic                     1,836     1,840     1,836     1,830     1,825
    Diluted                   1,846     1,842     1,836     1,830     1,825    

EPS - basic and diluted     $  0.48   $  0.28   $ (0.20)  $ (0.09)  $  0.70

PERCENT OF REVENUE                                 
Operating revenue             100.0%    100.0%    100.0%    100.0%    100.0%   
Operating expenses                                 
    Salaries, wages and
     benefits                  38.9      40.0      40.5      40.3      37.2   
    Purchased
     transportation            10.9       5.9       5.3       4.9       4.9   
    Fuel                        7.9      12.0      12.7      11.2      10.6   
    Maintenance                 6.5       5.8       6.0       6.1       6.2   
    Depreciation               10.3      11.6      12.2      13.2      12.3   
    Insurance and claims        2.6       2.9       3.0       3.3       4.1   
    Taxes and licenses          9.6       9.6      10.9      11.3      11.0   
    Supplies and other          6.7       5.8       5.4       5.6       5.2   
        Total operating
         expenses              93.4      93.6      96.0      95.9      91.5   
Operating income                6.6       6.4       4.0       4.1       8.5   
Interest expense                4.6       5.1       5.1       4.6       3.4   
Income (loss) before
 income taxes                   2.0       1.3      (1.1)     (0.5)      5.1   
Income tax expense (benefit)    0.8       0.5      (0.4)     (0.2)      2.1   
Net income (loss)               1.2       0.8      (0.7)     (0.3)      3.0   
</TABLE>
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results 
of Operations

1998 Compared to 1997

   Operating Revenue.    Operating revenue increased by 13.3% to $72.3 
million in 1998 from $63.8 million in 1997 as a result of an increase in 
revenue rate per mile and average number of tractors in service.  
Revenue per mile increased by 2.3% to $1.060 from $1.036.  The average 
number of tractors in service increased by 11.0% from 525 to 583 for the 
year.  Revenue from truck and intermodal logistics services increased 
22.2% in 1998 to $4.5 million from $3.7 million in 1997 primarily as a 
result of the addition of a logistics rail division in October 1998.  

   Operating Expenses.    Operating income improved to 6.6% of revenue 
from 6.4% in 1997.

   Salaries, wages and benefits decreased to 38.9% of revenue in 1998 
compared to 40.0% in 1997 as a result of the increased revenue rates per 
mile.  Also, the addition of owner operators, who own their trucks and 
contract with the company to haul freight, increased the revenues but 
not the wages.  Owner operators pay their own expenses, including 
payroll taxes, fuel, fuel taxes, tolls, insurance, licenses and interest 
costs.  The cost of owner operators is classified in purchased 
transportation.  There were three increases in wage rates for drivers in 
1998 to retain  and attract experienced drivers and no such increases in 
1997. 

Purchased transportation, which represents payments to other 
transportation service providers for hauling loads contracted through 
the company's logistics division, and the cost of owner operators, was 
10.9% of revenue in 1998 compared to 5.9% in 1997.  The increase is a 
result of the addition of owner operators to the fleet beginning in 
October 1997 and a 22% increase in logistics revenue.       

   Fuel decreased to 7.9% of revenue from 12.0% in 1997.  The decrease is 
due to an increase in revenue rate per mile, lower fuel costs nationwide 
in 1998 versus 1997, and the increase in owner operators in 1998. 
 
   Maintenance increased from 5.8% of revenue in 1997 to 6.5% in 1998 as 
a result of a longer holding period on company-owned trucks.

   Depreciation as a percent of revenue decreased to 10.3% in 1998 from 
11.6% in 1997 as a result of higher revenue per truck in 1998 and the 
increase in owner operators in 1998. 

   Insurance and claims decreased to 2.6% of revenue in 1998 from 2.9% 
in 1997.   This is a result of lower premiums on insurance policies, 
more favorable loss experience and an increase in the revenue rate per 
mile.

   Supplies and other expenses increased to 6.7% of revenue from 5.8% in 
1997.  Advertising costs for new drivers and a write-off of costs 
associated with a stock offering that was suspended due to unfavorable 
market conditions resulted in the increase in 1998.

   Interest Expense.  Interest expense decreased to 4.6% of revenue in 
1998 from 5.1% in 1997 primarily as a result of lower interest rates and 
an increase in owner operators.  In both 1997 and 1998, 81% of the 
company's capital was interest bearing.

   Net Income.  Net income for 1998 was $883,000 or $0.48 per share 
compared to net income of $509,000 or $0.28 per share in 1997.
<PAGE>

1997 Compared to 1996

   Operating Revenue.    Operating revenue increased by 15.4% to $63.8 
million in 1997 from $55.3 million in 1996 primarily as a result of an 
increase in revenue rate per mile and utilization.  Revenue per mile 
increased by 4.0% to $1.036 from $0.996.  Miles per week per unit 
increased 7.6% to 2,135 from 1,984.  Revenue per truck per week 
increased 12% to $2,212 in 1997 from $1,975 in 1996.  The average number 
of tractors in service increased by 4.0% from 506 to 525 for the year. 
Revenue from brokerage of freight to other carriers increased 12.8% in 
1997 to $3.7 million from $3.3 million in 1996.  

   Operating Expenses.    Operating income improved to 6.4% of revenue 
from 4.0% in 1996.

   Salaries, wages and benefits decreased to 40.0% of revenue in 1997 
compared to 40.5% in 1996 as a result of the increased revenue rates per 
mile.  There were no increases in wage rates for drivers in 1996 or 
1997.

   Purchased transportation, which represents payments to other 
transportation companies for hauling loads contracted through the 
company's logistics division and the cost of owner operators, was 5.9% 
of revenue in 1997 compared to 5.3% in 1996.  The increase is a result 
of adding owner operators to the fleet beginning in October 1997 and a 
12.8% increase in brokerage volume.       

   Fuel decreased to 12.0% of revenue from 12.7% in 1996.  The decrease 
is due to an increase in revenue rate per mile and lower fuel costs in 
1997 versus 1996.  The company's average fuel cost per gallon was $1.12 
in 1997 compared to $1.17 in 1996.  During the second half of 1997 fuel 
costs declined as a result of higher fuel inventories and increased oil 
production.  The cost in 1996 is net of $220,000 of gain on fuel hedging 
contracts which were in the money as a result of higher fuel prices.   

   Depreciation as a percent of revenue decreased to 11.6% in 1997 from
12.2% in 1996 as a result of higher revenue per truck in 1997. 

   Insurance and claims decreased to 2.9% of revenue in 1997 from 3.0% 
in 1996.  Effective January 1, 1997, the company's liability insurance 
carrier reduced its premium rate, lowering premiums by $37,000 in 1997. 

   Taxes and licenses decreased to 9.6% of revenue in 1997 from 10.9% in 
1996 as a result of higher revenue rates per mile in 1997. 

   Supplies and other expenses increased to 5.8% of revenue from 5.4% in 
1996.  The company installed on-board communications on its entire fleet 
in August 1996.  In 1997, the company incurred a full year of on-board 
communications costs versus five months of costs in 1996.  Also, 
advertising costs for new drivers increased in 1997.

   Interest Expense.  Interest expense was 5.1% of revenue in both 1996 
and 1997.  In both 1996 and 1997, 81% of the company's capital was 
interest bearing.

   Net Income (Loss).  Net income for 1997 was $509,000 or $0.28 per 
share compared to a net loss of $368,000 or $0.20 per share in 1996.

Seasonality

   Seasonality causes variations in the operations of the company as 
well as industry-wide operations.  Demand for the company's service is 
generally the highest during the summer and fall months.  Historically, 
expenses are greater during the winter months when fuel costs are higher 
and fuel efficiency is lower.
<PAGE>

Inflation

   The effect of inflation on the company has not been significant 
during the last three years.  An extended period of inflation could be 
expected to have an impact on the company's earnings by causing interest 
rates, fuel and other operating costs to increase.  Unless freight rates 
could be increased on a timely basis, operating results could be 
adversely affected.

Liquidity and Capital Resources

   The growth of the company's business has required significant 
investments in new revenue equipment acquired primarily through secured 
borrowings.  Net capital expenditures, principally for revenue 
equipment, were $7.6 million, $11.3 million and $10.0 million for the 
years ended December 31, 1996, 1997 and 1998, respectively.  Included in 
the 1996 figure is $1.6 million for on-board satellite communications 
equipment.  The company plans to expand its company-owned fleet by 50 
tractors in 1999 (30 expansion units and 20 units to replace tractors 
traded in 1998).  At February 28, 1999, the company had arrangements for 
216 tractors (30  new units and 186 replacement units) at a cost of 
$17.3 million.  The company's capital expenditures will be financed 
through internally generated funds and secured borrowings.

   Historically, the company has obtained loans for its revenue 
equipment which are of shorter duration (three to five years for 
trailers, four and a half years for tractors) than the economic useful 
lives of the equipment.  While such loans have current maturities that 
tend to create working capital deficits that could adversely affect cash 
flows, management believes these factors are mitigated by the more 
attractive interest rates and terms available on these shorter 
maturities.  This financing practice has been a significant cause of the 
working capital deficit which has existed since the company's inception.  

   The company intends to continue to obtain loans with shorter maturities 
than the useful lives of its revenue equipment.  This method of 
financing can be expected to continue to produce working capital 
deficits in the future.  The company's working capital deficit at 
December 31, 1998 was $8.3 million.  Primarily due to the company's 
equity position and the potential for refinancing of both unencumbered 
and encumbered assets, working capital deficits historically have not 
been a barrier to the company's ability to borrow funds for operations 
and expansion.

   The company has a credit line of $8.0 million with its primary 
lending bank that bears interest at the prime lending rate.
Borrowings under this line were $3.3 million at December 31, 1998, $1.6 
million of the available credit line was committed for letters of credit 
issued by the bank and the guarantee of the unsecured portion of certain 
loans made to certain company officers for purchases of company stock.  
The current line expires June 9, 2000 and is secured by accounts 
receivable.  The company has received commitments for up to $17.3 
million of new revenue equipment financing that will be at fixed 
interest rates.  In the opinion of management, the company has adequate 
liquidity for the foreseeable future based upon funds expected to be 
generated from operations, the company's equity position, the potential 
for refinancing of assets owned by the company and the company's ability 
to obtain secured equipment financing.
<PAGE>

Year 2000 Issue

   The company has completed a comprehensive inventory and assessment of 
its Year 2000 issues and its internal systems (both information 
technology "IT" and non-IT).  The company's application software 
programs which have been developed internally will be Year 2000 
compliant with minor  modifications that the company's IT department 
will complete.  Computer hardware consists almost exclusively of Apple 
Macintosh computers which are Year 2000 compliant according to Apple 
Computer, Inc.  Non-Macintosh computer hardware has been replaced.  
Certain of the company's application and equipment software programs are 
purchased from and/or maintained by vendors.  The company is working 
with these software vendors to verify that these applications become 
Year 2000 compliant.  

   The company believes that with modifications to existing software, 
the cost of which is not expected to be material, the Year 2000 issue 
will not pose significant operational problems for the company.  The 
company expensed less than $10,000 in costs relating to the Year 2000 
issue in the year ended December 31, 1998.

   As part of the company's comprehensive review, it is continuing to 
verify the Year 2000 readiness of third parties (vendors and customers) 
with whom the company has material relationships.  The company has 
material vendor relationships with financial institutions and 
telecommunications companies.  These vendors indicate that they expect 
to achieve compliance and do not anticipate business interruptions as 
the century changes.  The company is developing contingency plans to 
address Year 2000 issues that may arise with these key vendors.  At 
present the company is not able to determine with certainty the effect 
on the company's results of operations, liquidity, and financial 
condition in the event the company's material vendors and customers are 
not Year 2000 compliant.  The company will continue to monitor the 
progress of its material vendors and customers. 

Market Risk

   The company is exposed to various market risks, including the effects 
of interest rates and fuel prices.  The company utilizes primarily fixed 
rate financial instruments with varying maturities.  The company's long-
term financing is all at fixed rates.  The company's working capital 
line of credit is at a variable rate.  The detail of the company's debt 
structure is more fully described in Note 3 to the financial statements.

   The company uses call options as hedges on heating oil in order to 
manage a portion of its exposure to variable diesel prices.  These 
agreements provide some protection from rising fuel prices.  The 
company's exposure to loss on the call options is limited to the premium 
cost of the contract.  Based on historical information, the company 
believes the correlation between the market prices of diesel fuel and 
heating oil is highly effective.  The company's fuel hedging program is 
discussed in more detail in Note 1 to the financial statements.  The 
company's heating oil option contracts are not material to the company's 
financial position and represent no significant market exposure. The 
company maintained fuel inventories for use in normal operations at 
December 31, 1998 and represented no significant market exposure.

   The table below provides information about the company's fixed rate 
financial instruments at December 31, 1998.  The table below also 
presents principal cash flows (in millions) and related weighted average 
interest rates by contractual maturity dates.
<TABLE>
            Expected           Fixed           Average
            Maturity           Rate            Interest
            Date               Debt            Rate
           <S>                <C>             <C>

            1999               $ 16.3          7.60%
            2000                 14.7          7.53%
            2001                  7.8          7.26%
            2002                  4.2          7.14%
            2003                  0.9          6.95%
            Thereafter            0.2          7.00%

            Total              $ 44.1      

            Fair value         $ 39.9
</TABLE>
<PAGE>
   
Other

   Effective January 1, 1999, the company adopted Statement of Position 
98-1, Accounting for the Costs of Computer Software Developed or 
Obtained for Internal Use ("the SOP").  The statement requires 
capitalization of certain costs associated with developing or obtaining 
internal-use software, once the capitalization criteria of the SOP have 
been met.  Capitalizable costs include external direct costs of 
materials and services consumed in developing or obtaining the software, 
payroll and payroll-related costs for employees directly associated with 
the project, and interest.  Prior to adoption of the standard, the 
company had capitalized only the external direct costs associated with 
internal-use software.  The company has not yet determined the impact of 
adoption of the SOP.

   The Financial Accounting Standards Board (FASB) issued statement No. 
133, Accounting For Derivative Instruments and Hedging Activities that 
will be effective for the company's fiscal year ended December 31, 2000.  
This statement establishes accounting and reporting standards requiring 
all derivative instruments to be recorded in the balance sheet at their 
fair value.  The statement requires changes in a derivative's fair value 
to be recognized currently in earnings, except for special qualifying 
hedges for which gains and losses may offset the hedged item in the 
income statement.  The company has not yet determined the timing or 
impact of adoption of statement No. 133.


   This annual report contains forward-looking statements that are based on 
current expectations and are subject to risks and uncertainties.  Such 
comments are based upon information available to management and 
management's perception thereof as of the date of this annual report.  
Actual results could differ materially from those forward looking 
statements.  Such differences could be caused by a number of factors 
including, but not limited to, potential adverse effects of regulation; 
changes in competition and the effects of such changes; increased 
competition; changes in fuel prices; changes in economic, political or 
regulatory environments; litigation involving the company; changes in 
the availability of a stable labor force; ability of the company to hire 
drivers meeting company standards; changes in management strategies; 
environmental or tax matters; Year 2000 matters as discussed herein and 
risks described from time to time in reports filed by the company with 
the Securities and Exchange Commission.  Readers should take these 
factors into account in evaluating any such forward-looking statements. 
<PAGE>

               REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS





To the Board of Directors and Stockholders of OTR Express, Inc.:

   We have audited the accompanying balance sheets of OTR Express, Inc. 
(a Kansas corporation) as of December 31, 1998 and 1997, and the related 
statements of operations, stockholders' equity and cash flows for each 
of the three years in the period ended December 31, 1998.  These 
financial statements are the responsibility of the company's management.  
Our responsibility is to express an opinion on these financial 
statements based on our audits.

   We conducted our audits in accordance with generally accepted 
auditing standards.  Those standards require that we plan and perform 
the audits to obtain reasonable assurance about whether the financial 
statements are free of material misstatement.  An audit includes 
examining, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements.  An audit also includes 
assessing the accounting principles used and significant estimates made 
by management, as well as evaluating the overall financial statement 
presentation.  We believe that our audits provide a reasonable basis for 
our opinion.  

   In our opinion, the financial statements referred to above present 
fairly, in all material respects, the financial position of OTR Express, 
Inc. as of December 31, 1998 and 1997, and the results of its operations 
and its cash flows for each of the three years in the period ended 
December 31, 1998, in conformity with generally accepted accounting 
principles.

   





                                           /s/ Arthur Andersen LLP
                                           ARTHUR ANDERSEN LLP



Kansas City, Missouri
February 5, 1999
<PAGE>
<TABLE>
Balance Sheets                                              OTR Express, Inc.
<CAPTION>

At December 31                             1998              1997
<S>                                       <C>               <C>               
ASSETS            
CURRENT ASSETS            
   Cash                                    $   521,484       $   318,760
   Accounts receivable, less
    allowance of $77,403 and $101,123        8,409,332         7,736,360
   Fuel inventory                              118,146           155,762
   Prepaid expenses and other                  962,211         1,012,517
      TOTAL CURRENT ASSETS                  10,011,173         9,223,399
                  
PROPERTY AND EQUIPMENT, at cost,
 less accumulated depreciation              49,209,269        46,810,777
                  
      TOTAL ASSETS                         $59,220,442       $56,034,176
                  
            
LIABILITIES AND STOCKHOLDERS' EQUITY            
CURRENT LIABILITIES            
   Accounts payable, trade                 $ 2,060,251       $ 1,603,654
   Accrued payroll and taxes                 1,007,735           861,857
   Insurance and claims and other            1,365,739         1,414,721
   Current portion of long-term debt        13,837,296        14,259,700
      TOTAL CURRENT LIABILITIES             18,271,021        18,139,932
                  
LONG-TERM DEBT                              28,658,211        26,688,357
DEFERRED INCOME TAXES                        2,400,000         1,859,803
COMMITMENTS AND CONTINGENCIES (Note 8)            
                  
STOCKHOLDERS' EQUITY            
   Common stock, $.01 par value,
    20,000,000 shares authorized,
    1,852,709 and 1,849,209 issued              18,527            18,492
   Additional paid-in capital                6,598,679         6,581,214
   Retained earnings                         3,675,738         2,792,762
   Debt guarantee                             (297,877)                -
   Treasury stock, 16,753
     and 8,693 shares                         (103,857)          (46,384)
      TOTAL STOCKHOLDERS' EQUITY             9,891,210         9,346,084
                  
   TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY                               $59,220,442       $56,034,176
                  
                  

The notes to financial statements are an integral part of these 
statements.
</TABLE>
<PAGE>
<TABLE>
Statements of  Operations                             OTR Express, Inc.
<CAPTION>

For the Years Ended December 31     1998         1997         1996
<S>                                <C>          <C>          <C>               
Operating revenue                     
   Freight revenue                  $67,798,883  $60,127,246  $52,008,754
   Logistics revenue                  4,485,389    3,669,346    3,251,842
                     
   Total operating revenue           72,284,272   63,796,592   55,260,596
                     
Operating expenses                     
   Salaries, wages and benefits      28,128,618   25,548,804   22,394,911
   Purchased transportation           7,891,384    3,756,648    2,930,271
   Fuel                               5,691,461    7,631,908    7,011,074
   Maintenance                        4,725,008    3,654,294    3,310,101
   Depreciation                       7,437,151    7,400,583    6,722,717
   Insurance and claims               1,908,459    1,881,278    1,639,039
   Taxes and licenses                 6,899,020    6,124,075    6,047,748
   Supplies and other                 4,836,841    3,708,124    3,010,050
                     
   Total operating expenses          67,517,942   59,705,714   53,065,911
                     
Operating income                      4,766,330    4,090,878    2,194,685
                     
Interest expense                      3,351,438    3,269,138    2,788,749
                     
Income (loss) before income taxes     1,414,892      821,740     (594,064)
                     
Income tax expense (benefit)            531,916      312,262     (225,744)
                     
Net income (loss)                   $   882,976  $   509,478  $  (368,320)
                     
Weighted average number of shares                      
   Basic                              1,836,342    1,840,091    1,835,650
   Diluted                            1,846,156    1,841,805    1,835,650
                     
                     
Earnings (loss) per share                     
   Basic                            $      0.48  $      0.28  $     (0.20)
   Diluted                          $      0.48  $      0.28  $     (0.20)
                     

The notes to financial statements are an integral part of these 
statements.
</TABLE>
<PAGE>
<TABLE>
Statements of Stockholders' Equity                           OTR Express, Inc.
<CAPTION>

              Common   Additional   Retained    Debt      Treasury   Total
              Stock    Paid-In      Earnings  Guarantee   Stock      Stock-
                       Capital                                       holders'
                                                                     Equity

<S>          <C>     <C>          <C>        <C>       <C>         <C>   
                     
Balance,
December 31,
 1995         $18,352 $6,515,694   $2,651,604 $       - $(29,736)   $9,155,914
                   
Allocation of
 common stock                     
 held by ESOP      70     24,430            -         -        -        24,500
Repurchase of
 common stock       -          -            -         -   (6,999)       (6,999)
Net loss            -          -     (368,320)        -        -      (368,320)
                     
Balance, 
December 31,
 1996          18,422  6,540,124    2,283,284         -  (36,735)    8,805,095
                     
Allocation of
 common stock                     
 held by ESOP      70     41,090            -         -        -        41,160
Repurchase of
 common stock       -          -            -         -   (9,649)       (9,649)
Net income          -          -      509,478         -        -       509,478
                     
Balance,
December 31,
 1997          18,492   6,581,214   2,792,762         -  (46,384)    9,346,084
                     
Debt guarantee      -           -           -  (297,877)       -      (297,877)
Allocation of
 common stock                  
 held by ESOP      35      17,465           -         -        -        17,500
Repurchase of
 common stock       -           -           -         -  (57,473)      (57,473)
Net income          -           -     882,976         -        -       882,976
                     
Balance,
December 31,
 1998         $18,527  $6,598,679  $3,675,738  $(297,877)$(103,857) $9,891,210
                     
                     
                     

The notes to financial statements are an integral part of these 
statements.
</TABLE>
<PAGE>
<TABLE>
Statements of  Cash Flows                  OTR Express, Inc.
<CAPTION>

For the Years Ended December 31    1998           1997           1996
<S>                               <C>            <C>            <C>             
OPERATING ACTIVITIES                        
Net income (loss)                  $     882,976  $     509,478  $    (368,320)
Adjustments to reconcile
 net income (loss) to net                        
 cash provided by operating
 activities                     
 Depreciation                          7,437,151     7,400,583       6,722,717
 Deferred income taxes                   540,197       312,262        (225,744)
 Other                                   140,009        41,160          24,500
Changes in certain working
 capital items                     
 Accounts receivable                    (672,972)   (1,299,440)       (428,528)
 Other assets                             87,922       (18,718)       (223,078)
 Accounts payable and accrued
 expenses                                553,493       478,761         182,600
      Net cash provided by operating 
      activities                       8,968,776     7,424,086       5,684,147
                        
INVESTING ACTIVITIES                        
Acquisition of property
 and equipment                       (13,414,633)  (17,631,434)    (11,335,083)
Disposition of property
 and equipment                         3,456,481     6,314,599       3,707,187
      Net cash used in investing
      activities                      (9,958,152)  (11,316,835)     (7,627,896)
                        
FINANCING ACTIVITIES                        
Proceeds from issuance of
 long-term debt                       21,501,500    21,250,515      20,370,872
Repayments of long-term debt         (20,044,277)  (19,164,775)    (17,279,563)
Net increase (decrease) in bank
 notes payable                          (207,650)    2,092,312      (1,133,555)
Other                                    (57,473)       (9,650)         (6,999)
       Net cash provided by
       financing activities            1,192,100     4,168,402       1,950,755
                        
       Net increase in cash              202,724       275,653           7,006
       Cash, beginning of year           318,760        43,107          36,101
                        
       Cash, end of year            $    521,484 $     318,760   $      43,107
      
                  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                        
Cash paid for interest              $  3,346,500 $   3,265,120   $   2,794,254
Cash paid (refunded) for
     income taxes, net                    (8,281)       41,474        (128,986)
                        
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES      
Debt guarantee                      $    297,877 $           -  $            -


                        
The notes to financial statements are an integral part of these 
statements.
</TABLE>
<PAGE>

                        NOTES TO FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

OTR Express, Inc. ("the company") operates primarily as a dry van, 
truckload carrier headquartered in Olathe, Kansas.  The company 
transports general commodities through the continental United States and 
operates its business as one reportable segment.  The company also 
provides non asset-based logistics transportation services to its 
customers. 

Pervasiveness of Estimates

The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the reported amounts of assets and liabilities 
and disclosure of contingent assets and liabilities at the date of the 
financial statements and the reported amounts of revenues and expenses 
during the reporting period.  Actual results could differ from those 
estimates. 

Revenue Recognition

Operating revenue is recognized upon receipt of freight.  Related 
transportation expenses, including driver wages, purchased 
transportation, fuel and fuel taxes, are accrued when the revenue is 
recognized.  Management believes the difference between the company's 
method of revenue recognition, which is acceptable for generally 
accepted accounting principles, and the proportional recognition method, 
which is preferred, is not material to financial position or the results 
of operations.

Cash Flows 

For the statements of cash flows, cash consists of cash on hand and 
demand deposits with financial institutions.

Concentration of Credit

The company's primary market includes medium and large sized full 
truckload shippers in the United States.  Loads encompass all types of 
products for dry vans, excluding perishables.  The company maintains a 
diversified freight base with no one customer or industry making up a 
significant percentage of the company's receivables or revenues.

Fuel Hedging

The company purchases six month call options on No. 2 heating oil to 
manage exposure to fluctuations in diesel fuel prices.  The company's 
exposure to loss is limited to the premium cost of the contract.  The 
options are carried at cost.  Gains and losses are deferred and 
recognized as adjustments to fuel expense when the underlying hedged 
transactions (fuel purchases) occur.  At December 31, 1998, option fair 
values totaled $2,000, deferred losses totaled $12,000 and notional 
amounts totaled $672,000.  At December 31, 1997, option fair values 
totaled $10,000, deferred losses totaled $35,000 and notional amounts 
totaled $1,797,000.
<PAGE>

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (continued)

Property, Equipment and Depreciation

Property and equipment are stated at cost.  When equipment is sold, the 
gain or loss indicated is recognized.  When equipment is traded, the 
basis of the new equipment is adjusted when necessary for any gain or 
loss indicated.  The cost of tires and tubes are capitalized as part of 
the tractors and trailers at the time of acquisition and depreciated as 
a component of the tractors and trailers.  Replacement tires and tubes 
are charged to maintenance expense when installed.

Depreciation of property and equipment is computed using straight line 
methods and the following estimated useful lives:

 Assets                                      Estimated Useful Lives

Tractors                                           3.4 years
Trailers                                            10 years
Computer equipment, software      
  and other property                            5 - 12 years
Buildings and improvements                   31.5 - 40 years

The company depreciates tractors to estimated salvage values, currently 
47% to 51% of original cost.  The company depreciates trailers to 
estimated salvage values, currently 17% to 24% of original cost.

Fair Value of  Financial Instruments

Cash,  accounts receivable, payables and accruals approximate fair 
value.  The fair value of long-term debt, including current portion, 
approximates carrying value based on duration of notes and their 
interest rates.

Insurance and Claims

Accident and workers' compensation claims include the estimated 
settlements, settlement expenses and an allowance for claims incurred 
but not yet reported for property damage, personal injury and public 
liability losses from vehicle accidents and cargo losses as well as 
workers' compensation claims for amounts not covered by insurance.  
Accrued claims are determined based on estimates of the ultimate cost of 
settling reported and unreported claims, including expected settlement 
expenses.  Such estimates are based on management's evaluation of the 
nature and severity of individual claims and an estimate of future 
claims development based on historical claims development trends.  Since 
the reported liability is an estimate, the ultimate liability may be 
more or less than reported.  If adjustments to previously established 
accruals are required, such amounts are included in operating expenses.  
In 1998, 1997 and 1996, such adjustments were not significant.

The Company acts as a self-insurer for liability up to $50,000 for any 
single occurrence involving cargo, personal injury or property damage.  
Liability in excess of this amount is assumed by an insurance 
underwriter.  The Company acts as a self-insurer for workers' 
compensation liability up to a maximum liability of $250,000 per claim 
and $900,000 aggregate per year.  Liability in excess of this amount up 
to $5 million per occurrence is assumed by an insurance underwriter.  In 
addition, the Company has provided its insurance carriers with letters 
of credit and deposits of approximately $1.3 million in connection with 
its liability and workers' compensation insurance arrangements.

<PAGE>
2.  PROPERTY AND EQUIPMENT
<TABLE>
                                  1998                 1997
   Cost
<CAPTION>
<S>                              <C>                  <C>            
   Tractors                       $41,313,634          $41,277,834
   Trailers                        19,559,008           13,906,069
   Land                               838,962              838,962
   Buildings and improvements       2,931,435            2,879,459
   Computers and onboard
    communications equipment        2,842,964            2,358,357
   Other                            1,422,879            1,235,196
   Total cost                      68,908,882           62,495,877
   Less accumulated depreciation   19,699,613           15,685,100
   Net property and equipment     $49,209,269          $46,810,777
</TABLE>
3.  LONG-TERM DEBT
<TABLE>
                                  1998                 1997
<S>                              <C>                  <C>            
Line of credit , interest
 payable monthly at the prime 
 rate (7.75% at December 31,
 1998) due June 9, 2000,  
 collateralized by accounts
  receivable (1)                  $ 3,571,539          $ 3,481,312
            
Installment notes, 5.36% to
 9.15% payable in monthly
 installments of principal and            
 interest through November 2003,
  collateralized by tractors,
  trailers and computer             
  equipment                        37,480,238            35,961,915
            
Installment notes, 7.00% to
 8.75%, payable in monthly
 installments through January
 2005, collateralized by real
 property                           1,443,730             1,504,830
                                   42,495,507            40,948,057
   Less current portion            13,837,296            14,259,700
   Long-term debt                 $28,658,211           $26,688,357



Maturities of long-term debt are as follows:           
                           1999                 $13,837,296
                           2000                  16,460,444
                           2001                   7,112,040
                           2002                   4,034,443
                           2003                     907,449
                           Thereafter               143,835
                                                $42,495,507
</TABLE>
<PAGE>

3.  LONG-TERM DEBT (continued)

(1)  The line of credit agreement provides for maximum borrowings of 
$8,000,000 based on an 85% advance rate on eligible accounts receivable, 
as defined, through December 31, 1998.  The line bears interest at a 
variable rate, based upon the prime rate, or LIBOR, at the company's 
election.  The agreement contains certain covenants relating to tangible 
net worth, leverage ratios, debt service coverage and other factors.  
The company was in compliance with all required covenants at December 
31, 1998.   Borrowings on the line totaled $3,274,000 at December 31, 
1998.  The company had $4,221,000 of additional borrowing availability 
as of December 31, 1998.   A total of $1,296,000 of the credit line was 
committed for letters of credit and $298,000 to guarantee officers loans 
for stock purchases (see Note 8).  The weighted average interest rate on 
the line of credit for the year ended December 31, 1998 was 8.5%.  The 
annual average balance borrowed on the line of credit for the year ended 
December 31, 1998 was $2,817,000.


4.  STOCK OPTION PLAN

The company has reserved 197,000 shares of its common stock for issuance 
to key management personnel and directors of the company under three 
stock option plans that permit grants of nonqualified stock options.  
The option price cannot be lower than the fair market value of the stock 
at the date of grant.  The options are exercisable over a period not to 
exceed 10 years from the date of grant (5 years for a more than 10% 
shareholder).  Options outstanding at December 31, 1998 had a weighted 
average contractual life of seven years, ten months and exercise prices 
ranged from $3.75 to $7.00 per share. 

The company applies Accounting Principles Board Opinion No. 25, 
Accounting for Stock Issued to Employees, in accounting for its plan, 
and accordingly has not recognized compensation costs in its financial 
statements for such plans.  Had compensation costs been recognized in 
accordance with Financial Accounting Standards Board Statement No. 123, 
Accounting for Stock-Based Compensation, the company's operating results 
would have been reported at the unaudited pro forma amounts indicated 
below:


                             1998          1997           1996
Net income (loss):                  
As reported                  $ 882,976     $ 509,478      $(368,320)
Pro Forma                    $ 731,577     $ 480,071      $(388,216)
                  
                  
Earnings (loss) per share:                  
As reported                  $    0.48     $    0.28      $   (0.20)
Pro Forma                    $    0.40     $    0.26      $   (0.21)

<PAGE>
4.  STOCK OPTION PLAN (continued)

The fair value of each option grant is estimated on the date of grant 
using the Black-Scholes option pricing model with the following weighted 
average assumptions used for the 1998, 1997 and 1996 grants:

                                   1998           1997                1996
Dividend yield                     None           None                None
Expected volatility      38.6% to  49.3%          40.5%      32.6% to 36.3%
Risk-free interest rate     4.6% to 5.6%   5.7% to 6.4%        5.9% to 6.2%
Expected option life            3 years        3 years             3 years


A summary of the company's stock option plans as of December 31, 1998 
and changes during 1998, 1997 and 1996 is presented below: 
      
                             1998            1997              1996   
                              Per Share         Per Share         Per Share
                      Shares    (a)      Shares   (a)       Shares  (a)
Outstanding at 
 beginning of year   110,000   $5.30     80,000   $5.18     50,000   $5.30

Granted               94,256   $6.83     30,000   $5.63     30,000   $4.99

Exercised                  -       -          -       -          -       -

Forfeited             (7,256)  $5.36          -       -          -       -
Outstanding at
   end of year       197,000   $6.03    110,000   $5.30     80,000   $5.18
Exercisable at end
   of year           158,980             52,545             26,333   

Weighted average
   fair value of 
   options granted
   during the year  $244,000            $47,000            $32,000   

(a)  Weighted average exercise price per share.


5.  EMPLOYEE STOCK OWNERSHIP PLAN

The company has a non-qualified ESOP available to all employees except 
executive management which enables them to receive shares of the 
company's common stock.  The cost of the ESOP is borne by the company.  
For the year ended December 31, 1998 the company allocated to 
participants 3,500 shares resulting in ESOP expense of $17,500.  In each 
of the years 1997 and 1996, 7,000 shares of stock held by the ESOP were 
allocated to participants, resulting in ESOP expense of $41,160 and 
$24,500 for the years ended December 31, 1997 and 1996, respectively. 

<PAGE>

6.  INCOME TAXES

Deferred income taxes reflect the impact of temporary differences 
between assets and liabilities for financial reporting purposes and such 
amounts as measured by tax laws and regulations.  

Deferred tax assets and liabilities are comprised of the following at 
December 31:

                                              1998           1997
Deferred tax assets               
   Claims and other reserves                  $  467,624     $  472,507
   Net operating loss carryforward             1,924,655      1,069,926
   Other                                         273,218        273,208
                                               2,665,497      1,815,641
Deferred tax liabilities               
   Property and equipment                      4,863,827      3,416,036
   Revenue                                       201,670        259,408
                                               5,065,497      3,675,444
               
Net deferred tax liability                    $2,400,000     $1,859,803


A reconciliation between the provision for income taxes and the expected 
taxes using the federal statutory rate of 34% follows:

                                        1998          1997          1996
                  
Tax expense (benefit) at federal
 statutory rate                         $ 475,320     $ 279,392     $(201,982)
State income tax expense (benefit)         56,596        32,870       (23,762)
     Deferred income tax expense
      (benefit)                         $ 531,916     $ 312,262     $(225,744)


The company has available net operating loss carryforwards of 
approximately $5,065,000 for regular income tax purposes expiring 
through 2013.
<PAGE>


7.  EARNINGS PER SHARE

Basic earnings per share is based upon the weighted average common 
shares outstanding during the year.  Dilutive earnings per share is 
based upon the weighted average common and common equivalent shares 
outstanding during each year.  Employee stock options are the company's 
only common stock equivalents; there are no other potentially dilutive 
securities.  There was no effect of this accounting change on previously 
reported earnings per share.

Basic earnings (loss) per share and diluted earnings (loss) per share were 
$0.48, $0.28 and ($0.20) for the years ending December 31, 1998, 1997, 
and 1996, respectively. 


8.  COMMITMENTS AND CONTINGENCIES

Legal
Various legal actions, claims and assessments are pending against the 
company.  It is the opinion of management that these actions will have 
no significant impact on the company's financial condition or its 
results of operations.

Stock Loans
In 1998, the company entered into Stock Purchase Assistance Agreements 
("Agreement") with four of its executive officers that allowed them to 
purchase company stock in the amount of $480,000 collectively with funds 
from personal loans which are partially guaranteed by the company.  The 
loans are payable in six equal principal installments plus interest 
payable on January 1st of each year.  The loans bear interest at the 
prime rate (7.75% at December 31, 1998).  If the executive officers 
remain with the company for the entire year, the company will pay to the 
executive officers as compensation an amount equal to the principal 
installment loan payments due for such year.  The executive officers are 
then responsible for paying to the lender the principal installment loan 
payment due and any accrued interest for the year.  The company does not 
guarantee the accrued interest portion of the loans.  The company has 
recorded the guarantee as a reduction of stockholders' equity and an 
increase in long-term debt.  The company has recorded compensation 
expense of $37,000 in 1998 in connection with the Agreement.   

<PAGE>

Board of Directors                            Executive and Other Officers
   
William P. Ward (1), (3), (4), (5), (6), (7)  Gary J. Klusman
Chairman of the Board                         President and 
OTR Express, Inc.                             Chief Executive Officer

Gary J. Klusman  (4)                          Janice Kathryn Ward
President and                                 Vice President 
Chief Executive Officer
OTR Express, Inc.                             Steven W. Ruben
                                              Vice President Finance and
Janice Kathryn Ward (5)                       Chief Financial Officer      
Vice President 
OTR Express, Inc.                             Christine D. Schowengerdt
                                              Treasurer and Assistant Secretary
Dr. James P. Anthony  (1), (2)
Radiologist                                   Carolyn J. Davidson
Carondelet Radiology Group                    Vice President Administration 
                                              and Secretary
Frank J. Becker (1), (6)   
President                                     Gary L. Hinkle
Becker Investments, Inc.                      Vice President Fleet Management

Terry G. Christenberry  (2), (4), (6)         Marc E. Hirschmann
President                                     Vice President Maintenance  and
Christenberry, Collet & Co., Inc.             Purchasing
                                              
                                              Paul A. MacNaughton   
Charles M. Foudree (1), (3), (7)              Vice President Information 
Executive Vice President - Finance            Systems
Harmon Industries, Inc.
                                              Chip Seitz
Dean W. Graves  (4), (7)                      Vice President OTR Logistics
Owner, Dean Graves, FAIA   
Architectural Firm                            Eric T. Janzen
                                              Vice President Marketing
Dr. Ralph E. MacNaughton  (2), (3), (5)
Physician, Retired                            Jeffrey T. Brown
Carondelet Radiology Group                    Vice President Operations

                                              David J. Caldwell
                                              Vice President Fleet Operations
Member of:   

(1)   Governance Committee
(2)   Audit Committee
(3)   Compensation Committee
(4)   Strategy Committee
(5)   Risk Management Committee
(6)   Mergers and Acquisitions Committee
(7)   Investor and Public Relations Committee   



Photography by:
L. Andrew & Co. Photography (Cover and 
page 9) , Attig Photography Studio (pages 3    Michaels(r) is a registered  
and 4) and OTR Express, Inc. driver/manager    trademark  of  Michaels Stores,
(page 6)                                       Inc.      

<PAGE>   
<TABLE>
QUARTERLY FINANCIAL DATA (Unaudited)
<CAPTION>
                                     1998                        
(In thousands except per share data)
                      Mar 31      Jun 30      Sep 30      Dec 31      Year
<S>                  <C>         <C>         <C>         <C>         <C>     
INCOME STATEMENT                              
Operating revenue     $16,747     $17,750     $18,557     $19,230     $72,284
Operating expenses                              
    Salaries, wages
    and benefits        6,498       6,660       7,282       7,689      28,129
    Purchased
    transportation      1,390       1,850       2,047       2,604       7,891
    Fuel                1,589       1,480       1,359       1,263       5,691
    Maintenance         1,074       1,165       1,252       1,234       4,725
    Depreciation        1,876       1,954       1,914       1,693       7,437
    Insurance and
    claims                546         553         331         478       1,908
    Taxes and licenses  1,609       1,678       1,771       1,841       6,899
    Supplies and other  1,124       1,101       1,331       1,282       4,838
        Total operating
        expenses       15,706      16,441      17,287      18,084      67,518
Operating income        1,041       1,309       1,270       1,146       4,766
Interest expense          838         835         843         835       3,351
Income before income
 taxes                    203         474         427         311       1,415
Income tax expense         77         180         154         121         532
Net income            $   126     $   294     $   273     $   190     $   883
Weighted average
 number of shares
    Basic               1,836        1,831      1,836       1,836       1,836
    Diluted             1,851        1,851      1,841       1,841       1,846

   Earnings per share
    Basic             $  0.07     $   0.16    $  0.15     $  0.10     $  0.48
    Diluted           $  0.07     $   0.16    $  0.15     $  0.10     $  0.48   





PERCENT OF REVENUE                                 
Operating revenue       100.0%       100.0 %    100.0%      100.0%      100.0%
Operating expenses                                 
    Salaries, wages
    and benefits         38.8          37.5      39.2        40.0        38.9   
    Purchased
    transportation        8.3          10.4      11.0        13.5        10.9   
    Fuel                  9.5           8.3       7.3         6.6         7.9   
    Maintenance           6.4           6.6       6.7         6.4         6.5   
    Depreciation         11.2          11.0      10.3         8.8        10.3   
    Insurance and
    claims                3.3           3.1       1.9         2.5         2.6   
    Taxes and licenses    9.6           9.5       9.5         9.6         9.6   
    Supplies and other    6.7           6.2       7.3         6.6         6.7   
        Total operating
        expenses         93.8          92.6      93.2        94.0        93.4   
Operating income          6.2           7.4       6.8         6.0         6.6   
Interest expense          5.0           4.7       4.5         4.4         4.6   
Income before income 
 taxes                    1.2           2.7       2.3         1.6         2.0   
Income tax expense        0.5           1.0       0.8         0.6         0.8   
Net income                0.7           1.7       1.5         1.0         1.2   

</TABLE>
<PAGE>
<TABLE>
QUARTERLY FINANCIAL DATA (Unaudited)
<CAPTION> 
                                             1997                        
(In thousands except per share data)     
                      Mar 31      Jun 30      Sep 30      Dec 31      Year
<S>                  <C>         <C>         <C>         <C>         <C>      
INCOME STATEMENT                              
Operating revenue     $13,831     $15,663     $17,054     $17,249     $63,797
Operating expenses                              
    Salaries, wages
    and benefits        5,524       6,217       6,796       7,012      25,549
    Purchased
    transportation        940         847         934       1,036       3,757
    Fuel                1,824       1,876       1,908       2,024       7,632
    Maintenance           856         932         965         901       3,654
    Depreciation        1,716       1,811       1,936       1,938       7,401
    Insurance and
    claims                317         535         543         487       1,882
    Taxes and licenses  1,455       1,513       1,598       1,558       6,124
    Supplies and other    807         894         947       1,060       3,708
        Total operating
        expenses       13,439      14,625      15,627      16,016      59,707
Operating income          392       1,038       1,427       1,233       4,090
Interest expense          720         800         901         848       3,269
Income (loss) before
 income taxes            (328)        238         526         385         821
Income tax expense
 (benefit)               (125)         91         200         146         312
Net income (loss)     $  (203)    $   147     $   326     $   239     $   509
Weighted average
 number of shares
    Basic               1,841       1,841       1,841       1,841       1,840
    Diluted             1,841       1,841       1,841       1,842       1,842

Earnings (loss) per
 share
    Basic             $ (0.11)    $  0.08     $  0.18     $  0.13     $  0.28
    Diluted           $ (0.11)    $  0.08     $  0.18     $  0.13     $  0.28   



PERCENT OF REVENUE                                 
Operating revenue       100.0%      100.0%      100.0%      100.0%      100.0%
Operating expenses                                 
    Salaries, wages
    and benefits         39.9        39.7        39.8        40.7        40.0   
    Purchased
    transportation        6.8         5.4         5.5         6.0         5.9   
    Fuel                 13.2        12.0        11.2        11.7        12.0   
    Maintenance           6.3         5.9         5.8         5.3         5.8   
    Depreciation         12.4        11.6        11.4        11.2        11.6   
    Insurance and
    claims                2.3         3.4         3.2         2.8         2.9   
    Taxes and licenses   10.5         9.7         9.2         9.0         9.6   
    Supplies and other    5.8         5.7         5.5         6.2         5.8   
        Total operating
        expenses         97.2        93.4        91.6        92.9        93.6   
Operating income          2.8         6.6         8.4         7.1         6.4   
Interest expense          5.2         5.1         5.3         4.9         5.1   
Income (loss) before
 income taxes            (2.4)        1.5         3.1         2.2         1.3   
Income tax expense
 (benefit)               (0.9)        0.6         1.2         0.8         0.5   
Net income (loss)        (1.5)        0.9         1.9         1.4         0.8   
</TABLE>
<PAGE>
Stockholder Information

   At March 11, 1999, there were 164 stockholders of record.  Since many 
stockholders hold their certificates in "street name," management 
estimates the number of individual stockholders is approximately 1,000.


Price Range of Stock

   The company's common stock is traded on The Nasdaq Stock Market(r) 
under the symbol OTRX.  The following table sets forth for the periods 
indicated the high and low sale prices of the common stock, as reported 
by The Nasdaq Stock Market.


                                      1997
        Period                                    Stock Price (Low-High)
  Jan 1 to Mar 31, 1997                               $2.625 - $4.000
  Apr 1 to Jun 30, 1997                               $2.625 - $5.125
  Jul 1 to Sep 30, 1997                               $4.625 - $5.750
  Oct 1 to Dec 31, 1997                               $5.250 - $6.250 

                                  1998-1999
        Period                                    Stock Price (Low-High)
  Jan 1 to Mar 31, 1998                               $5.625 - $7.625
  Apr 1 to Jun 30, 1998                               $4.500 - $8.000
  Jul 1 to Sep 30, 1998                               $4.500 - $6.000
  Oct 1 to Dec 31, 1998                               $2.750 - $5.500
  Jan 1 to Feb 28, 1999                               $3.750 - $5.250

   To date, the company has not declared or paid any dividends on its 
Common Stock and presently does not anticipate paying any such dividends 
in the foreseeable future.  It is management's present intention to 
retain future earnings, if any, for use in the company's business 
operations.
<PAGE>


Stockholder Information
   
Corporate Offices                           Transfer Agent
OTR Express, Inc.                           UMB Bank of Kansas City, N.A.
804 N. Meadowbrook Drive                    Securities Transfer Division
Olathe, Kansas  66062                       P.O. Box 410064
Kansas City, Missouri  64141-0064
(913) 829-1616

                                            Independent Auditors
Mailing address:                            Arthur Andersen LLP
P.O. Box 2819                               911 Main
Olathe, KS  66063-0819                      Suite 1500
                                            Kansas City, Missouri  64105

Annual Meeting                              General Counsel
The annual meeting of the stockholder       Bryan Cave LLP
will be at 3:00 p.m., Thursday,             3500 One Kansas City Place
May 6, 1999, at the Overland Park Marriott  1200 Main Street
Hotel, 10800 Metcalf Avenue, Overland       Kansas City, MO  64105
Park, Kansas


Form 10-K                                   Common Stock Listing
Stockholders may receive a copy of          OTR  Express, Inc. common stock 
the company's 1998 Annual Report to         trades on The NASDAQ Stock
the Securities and Exchange Commission      Market(r) under the symbol: OTRX
on Form 10-K free of charge by writing
to:
             Investor Relations
             OTR Express, Inc.
             P.O. Box 2819
             Olathe, Kansas  66063-0819   
<PAGE>
                           OTR EXPRESS, INC.
               804 N. MEADOWBROOK DRIVE P.O. BOX 2819
                  (913)829-1616  FAX (913)829-0622
                            WWW.OTRX.COM