FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   (Mark One)
     [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                 For the fiscal quarter ended     March 31, 1998
                                                  --------------

                                       OR

     [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

     For the transition period from ____________ to ____________

                       Commission file number:     0-2882
                                                   ------

                             ESCO TRANSPORTATION CO.
                             -----------------------
             (Exact name of registrant as specified in its charter)

               DELAWARE                             55-0257510
    -------------------------------     ------------------------------------
    (State or other jurisdiction of     (I.R.S. Employer Identification no.)
     incorporation or organization)

            6505 HOMESTEAD
            HOUSTON, TEXAS                               77028
    ----------------------------------------           ----------
    (Address of principal executive offices)           (Zip Code)

Registrant's telephone number, including area code:  (713) 635-1008
                                                     --------------

          Securities registered pursuant to Section 12 (b) of the Act:

                                      NONE

          Securities registered pursuant to Section 12 (g) of the Act:

                     Common Stock $ .001 par value per share
                     ---------------------------------------
                                 Title of class

Indicate by check mark whether the registrant (1) has filed all reports required
to  be  filed  by  Section  13  or 15 (d) of the Securities Exchange Act of 1934
during  the  preceding 12 months (or for such shorter period that the registrant
was  required  to  file  such  reports), and (2) has been subject to such filing
requirements  for  the  past  90  days.  Yes       No  X .(1)
                                             ---      ---

Indicate  the  number  of  shares outstanding of each of the issuer's classes of
common  stock,  as  of  the  close  of  the  period  covered  by  this  report.

       Common Stock, $ .001 Par Value                    12,477,612
       ------------------------------                    ----------
                 (Class)                    (Outstanding as of March 31, 1998)

The  aggregate  market  value  of  the voting stock held by nonaffiliates of the
Registrant  on  March  31,  1998  was  approximately  $4,117,612.

(1) Registrant is herewith contemporaneously with this filing now current in all
reports  required  to  be  filed.

<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS


PART I   FINANCIAL INFORMATION
<S>      <C>                                                                  <C>
Item 1.  Financial Statements                                                 Page
                                                                              ------

         Balance Sheets for the Three Months Ended March 31,
         1998 (unaudited) and for the Year Ended December 31, 1997 (audited)       3

         Statements of Income for the Three Months Ended
         March 31, 1998 (unaudited)  and 1997 (unaudited)                          4

         Statements of Stockholders' Equity for the Three Months
         Ended March 31, 1998 (unaudited)
                                                                                   5
         Statements of Cash Flows for the Three Months Ended
         March 31, 1998 (unaudited) and 1997 (unaudited)                           6

         Notes to the Financial Statements (unaudited)                        7 - 10

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                      11

PART II  OTHER INFORMATION

Item 1.  Recent Developments in Legal Proceedings                                 13

Item 2.  Changes in Securities                                                    14

Item 3.  Defaults upon Senior Securities                                          14

Item 4.  Submission of Matters to a Vote of Security Holders                      14

Item 5.  Other Information                                                        14

Item 6.  Exhibits and Reports in Form 8-K                                         14

         Signatures                                                               15
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

ESCO  TRANSPORTATION  CO.
Balance  Sheets

                                                March 31, 1998    December 31, 1997
                                               ----------------  -------------------
ASSETS                                           (Unaudited)          (Audited)
<S>                                            <C>               <C>
CURRENT ASSETS:
  Cash and Cash Equivalents                    $       162,955   $           22,678
  Accounts Receivable, Net of Allowance for
       Bad Debts of $481,108 in 1997 and
       $248,796 in 1998                              2,532,396            2,282,893
  Truck Maintenance Supplies                            15,328                    0
  Notes Receivable - Stockholders                       75,533               20,000
  Prepaid Expenses - Current                           149,823               36,597
  Other Current Assets                                  23,714              204,460
                                               ----------------  -------------------
            TOTAL CURRENT ASSETS                     2,959,749            2,566,628
                                               ----------------  -------------------

PROPERTY AND EQUIPMENT
  Property and Equipment                            10,636,759           10,611,537
  Less Accumulated Depreciation                     (1,848,958)          (1,511,048)
                                               ----------------  -------------------
                                                     8,787,801            9,100,489
                                               ----------------  -------------------

OTHER ASSETS
  Prepaid Insurance - Net of Current Portion            91,948              101,097
  Other Assets - Non Current                            37,463               34,692
                                               ----------------  -------------------
                                                       129,411              135,789
                                               ----------------  -------------------

TOTAL ASSETS                                   $    11,876,961   $       11,802,906
                                               ================  ===================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Notes Payable to Stockholders                $             0   $           70,319
  Accounts Payable - Trade                             572,125              375,213
  Bank Overdrafts                                      279,249              280,715
  Accrued and Other Liabilities                        495,377              422,878
  Amounts Due Factor                                 1,894,722            1,262,094
  Current Portion of Long-Term Debt                  1,807,738            1,807,738
                                               ----------------  -------------------
            TOTAL CURRENT LIABILITIES                5,049,211            4,218,957
                                               ----------------  -------------------

LONG-TERM DEBT - NET OF CURRENT PORTION              6,194,784            6,645,188

DEFERRED INCOME TAXES                                        0                    0

COMMITMENTS                                                  0                    0

STOCKHOLDERS' EQUITY
  Common Stock, $.0001 Par Value; 20,000,000
       Shares Authorized; 12,176,760 Shares
       Issued and Outstanding in 1997 and
       12,477,612 in 1998                                1,519                1,218
  Additional Paid-In Capital                           910,956              863,818
  Retained Earnings (Deficit)                         (275,509)              77,725
                                               ----------------  -------------------
                                                       636,966              942,761
  Less Treasury Stock, At Cost                          (4,000)              (4,000)
                                               ----------------  -------------------
            TOTAL STOCKHOLDERS' EQUITY                 632,966              938,761
                                               ----------------  -------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $    11,876,961   $       11,802,906
                                               ================  ===================
</TABLE>

                                        3
<PAGE>
<TABLE>
<CAPTION>

ESCO  TRANSPORTATION  CO.
Statements  of  Income
For the Three Months Ended March 31, 1998 and 1997

                                                    1998          1997
                                                ------------  ------------
                                                 (Unaudited)  (Unaudited)
<S>                                             <C>           <C>
REVENUE:
  Freight Revenue                               $ 5,819,735   $ 5,082,331
  Oil and Gas Revenue                                 1,464         2,566
                                                ------------  ------------
       TOTAL REVENUE                              5,821,199     5,084,897
                                                ------------  ------------

EXPENSES:
  Cost of Freight Revenue                         4,265,291     3,427,112
  General Administrative Expenses                 1,296,091     1,329,602
  Depreciation and Depletion                        337,909       173,913
                                                ------------  ------------
       TOTAL EXPENSES                             5,899,291     4,930,627
                                                ------------  ------------
       OPERATING INCOME                             (78,092)      154,270

OTHER INCOME (EXPENSE)
  Interest Income                                         8           786
  Other Income                                        3,000             0
  Interest Expense                                 (278,293)     (112,825)
  Gain (Loss) on Sale of Assets                         150             0
                                                ------------  ------------
                                                   (275,135)     (112,039)
                                                ------------  ------------
       NET INCOME (LOSS) BEFORE INCOME TAXES       (353,227)       42,231

  Income Tax                                              0        (6,334)
                                                ------------  ------------
       NET INCOME (LOSS)                        $  (353,227)  $    35,897
                                                ============  ============
  Net Income (Loss) Per Share                   $     (.028)  $      .003
                                                ============  ============
Weighted Average Number of Shares Outstanding    12,477,612    12,176,760
</TABLE>

                                        4
<PAGE>
<TABLE>
<CAPTION>

ESCO  TRANSPORTATION  CO.
Statements  of  Stockholders'  Equity
For the Three Months Ended March 31, 1998 (Unaudited)

                                                           Additional    Retained
                                                            Paid-In      Earnings   Treasury
                                      Common Stock           Capital    (Deficit)     Stock      Total
                               ---------------------------  ----------  ----------  ----------  --------
                                   Shares       Amount
                               ------------  -------------
<S>                            <C>           <C>            <C>         <C>         <C>       <C>
Balance at December 31, 1997     12,176,760  $       1,218  $ 863,818   $  77,725   $(4,000)  $ 938,761
Correction                          174,352            174       (174)          0         0           0
Employee Stock Bonus                126,500            127     47,312           0         0      47,439
Net (Loss)                                0              0          0    (353,234)        0    (353,234)
                               ------------  -------------  ----------  ----------  --------  ----------
Balance at March 31, 1998        12,477,612  $       1,519  $ 910,956   $(275,509)  $(4,000)  $ 632,966
                               ============  =============  ==========  ==========  ========  ==========
</TABLE>

                                        5
<PAGE>
<TABLE>
<CAPTION>
ESCO  TRANSPORTATION  CO.
Statements  of  Cash  Flows
For the Three Months Ended March 31, 1998 and 1997


                                                1998          1997
                                            ------------  ------------
                                             (Unaudited)  (Unaudited)
<S>                                         <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Cash Provided by Operating Activities $   725,705   $  (148,303)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of Property and Equipment            (25,222)   (1,119,939)
  Other                                          (1,093)          (81)
                                            ------------  ------------

  Net Cash Used in Investing Activities         (26,315)   (1,120,020)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net Payments on Short-Term Debt               (64,709)        8,254
  Net Payments on Long-Term Debt               (494,404)      801,802
  Sale of Stock                                       0       500,000
                                            ------------  ------------

Net Cash Provided (Used) by Financing          (559,113)    1,310,056
  Activities                                ------------  ------------

Net Increase in Cash and Cash Equivalents       140,277        41,733


CASH AND CASH EQUIVALENTS, AT BEGINNING OF       22,678        20,450
  YEAR                                      ------------  ------------

CASH AND CASH EQUIVALENTS, AT END OF PERIOD $   162,955   $    62,183
                                            ============  ============
</TABLE>

                                        6
<PAGE>
ITEM  1.     Financial  Statements  (Continued)

ESCO  TRANSPORTATION  CO.
Notes  to  the  Financial  Statements
March  31,  1998  (Unaudited)


Note  1  -  Interim  Financial  Statements
------------------------------------------

The accompanying unaudited financial statements of ESCO Transportation Co., (the
"Company")  have  been  prepared  pursuant  to  the rules and regulations of the
Securities  and  Exchange  Commission.  Certain  information  and  footnote
disclosures normally included in annual financial statements have been condensed
or  omitted  pursuant  to  those  rules  and  regulations.  However, the Company
believes  the  disclosures contained herein are adequate to make the information
presented  not  misleading.  The financial statements reflect, in the opinion of
management,  all  material  adjustments  (which  include  only  normal recurring
adjustments)  necessary  to  present fairly the Company's financial position and
results  of  operations.

Note  2  -  Organization
------------------------

The Company was incorporated under the name of Power Oil Company in 1916 in West
Virginia.  In  1992,  the  Company was reincorporated as a Delaware corporation.
The  Company  changed  its  name from "Power Oil Company to "ESCO Transportation
Co."  in  1994.

ESCO  Transportation  maintains  two  divisions  with  distinct  transportation
services  offered  by  each.  The  Company's Intermodal division primarily hauls
container  and  piggyback  shipments between shipping locations and railroads or
ports.  This  division  operates  out  of facilities in Houston, Texas; Ontario,
California;  Memphis,  Tennessee; and Dallas, Texas.  The Company also maintains
an  Over-The-Road  division  that  performs  long  haul  services  for  numerous
customers  within  the  United  States.  The  main  office  for this division is
located  in  Springdale, Arkansas.  The Company's corporate office is located in
Houston,  Texas.

Note  3  -  Summary  of  Significant  Accounting  Policies
----------------------------------------------------------

A.   Basis  of  Accounting
     ---------------------

     Income and expenses are recorded on the accrual  method of  accounting  for
     financial and federal income tax reporting purposes.

B.   Use  of  Estimates
     ------------------

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect reported amounts and related  disclosures.  Actual
     results  could differ from these  estimates.  Management  believes that the
     estimates are reasonable.

C.   Revenue  Recognition
     --------------------

     Revenue and direct costs are recognized when the shipment is completed.

                                        7
<PAGE>
ITEM  1.     Financial  Statements  (Continued)

ESCO  TRANSPORTATION  CO.
Notes  to  the  Financial  Statements
March  31,  1998  (Unaudited)


Note  3  -  Summary  of  Significant  Accounting  Policies  (Continued)
-----------------------------------------------------------------------

D.   Cash  and  Cash  Equivalents
     ----------------------------

     For purposes of the  statements  of cash flows,  the Company  considers all
     cash on hand, cash in bank (demand deposits),  savings accounts,  cash held
     in brokerage  accounts and highly liquid debt instruments  purchased with a
     maturity of three months or less to be cash and cash equivalents.

E.   Property  and  Equipment
     ------------------------

     Property and  equipment  are carried at cost.  Depreciation  for  financial
     reporting  purposes has been computed on the straight-line  method over the
     estimated  useful  lives of the  assets  which  range  from three to twenty
     years.

     Accelerated   methods  of   depreciation   are  used  for   computation  of
     depreciation expense for income tax reporting purposes.

F.   Oil  and  Gas  Properties
     -------------------------

     The  Company  accounts  for its oil and  gas  exploration  and  development
     activities  using the  successful  efforts  method.  Under  this  method of
     accounting,  exploratory  drilling  costs which result in the  discovery of
     proved reserves are capitalized.  All other  exploratory  costs,  including
     geological and geophysical  costs, are expensed when incurred.  Development
     costs,  including  development of dry holes, are capitalized when incurred.
     The Company incurred no exploration and development  costs during the three
     months ended March 31, 1998.

     Depletion of  capitalized  costs on producing  properties  is computed on a
     property-by-property   basis  utilizing  the   unit-of-production   method.
     Depletion expense was $1,496 for 1997 and $1,494 for 1998.

     Lease   acquisition   costs  are  capitalized   when  incurred.   Leasehold
     improvements  are  recognized  through a charge to  operations if the lease
     expires or management decides to abandon the Company's interest.

     When assets are retired,  abandoned  or otherwise  disposed of, the related
     costs and accumulated  depreciation are removed from the accounts, and gain
     or loss is included in income.

                                        8
<PAGE>
ITEM  1.     Financial  Statements  (Continued)

ESCO  TRANSPORTATION  CO.
Notes  to  the  Financial  Statements
March  31,  1998  (Unaudited)


Note  3  -  Summary  of  Significant  Accounting  Policies  (Continued)
-----------------------------------------------------------------------

G.   Income  Taxes
     -------------

     The Company uses the liability  method of accounting for income taxes under
     which  deferred tax assets and  liabilities  are  recognized for deductible
     temporary  differences.  Temporary  differences are the differences between
     the  reported  amounts  of assets  and  liabilities  and  their tax  basis.
     Deferred  tax assets are  reduced by a  valuation  allowance  when,  in the
     opinion of management,  it is more likely than not that some portion or all
     of the deferred tax assets and  liabilities are adjusted for the effects of
     changes  in tax laws and  rates on the  date of  enactment.  For the  three
     months ended March 31, 1998,  net operating  loss benefits were offset by a
     valuation allowance.

H.   Net  Income  Per  Share
     -----------------------

     Net income  per common  share is based on the  weighted  average  number of
     shares  outstanding  during the year.  The Company  declared a one-for-four
     reverse stock split in 1994.  The Company  declared a  one-for-ten  forward
     stock split in 1996.  All share and per share amounts have been adjusted to
     reflect the stock splits.

I.   Concentration  of  Credit  Risk
     -------------------------------

     Financial   instruments   that   potentially   subject   the   Company   to
     concentrations  of  credit  risk  consist  principally  of  trade  accounts
     receivable.  In the normal  course of business  the Company  grants  credit
     without  collateral to customers.  Consequently,  the Company's  ability to
     collect the amounts due from customers is affected by economic conditions.

J.   Fair  Value  of  Financial  Instruments
     ---------------------------------------

     The Company has a number of financial  instruments,  none of which are held
     for  trading  purposes.  The Company  estimates  that the fair value of all
     financial instruments at March 31, 1998 does not differ materially from the
     aggregate  carrying  values of its  financial  instruments  recorded in the
     accompanying  balance  sheet.  The  estimated  fair value amounts have been
     determined  by  the  Company  using   available   market   information  and
     appropriate valuation methodologies.  Considerable judgement is necessarily
     required  in  interpreting  market data to develop  the  estimates  of fair
     value, and,  accordingly,  the estimates are not necessarily  indicative of
     the amounts that the Company could realize in the current market exchange.

                                        9
<PAGE>
ITEM  1.     Financial  Statements  (Continued)

ESCO  TRANSPORTATION  CO.
Notes  to  the  Financial  Statements
March  31,  1998  (Unaudited)


Note  4  -  Property  and  Equipment
------------------------------------

Property  and  equipment  consists  of  the  following:

<TABLE>
<CAPTION>
                                 Balance at    Balance at
Description                       3/31/98       12/31/97
------------------------------  ------------  ------------
<S>                             <C>           <C>
Land                            $   385,019   $   385,019
Buildings and Improvements          336,782       323,228
Office Equipment                    221,356       210,338
Communications Equipment            353,281       353,281
Furniture and Fixtures               30,133        29,483
Trucks, Tractors, and Trailers    9,145,654     9,145,654
Yard Equipment                      164,534       164,534
                                ------------  ------------
                                 10,636,759    10,611,537
Less Accumulated Depreciation    (1,848,958)   (1,511,048)
                                ------------  ------------
                                $ 8,787,801   $ 9,100,489
                                ============  ============
</TABLE>

Note  5  -  Long-Term  Debt  and  Financing  Arrangements
---------------------------------------------------------

Pursuant  to  a  factoring  agreement,  the  Company factors all of its accounts
receivable.  The  Company purchases all factored accounts receivable over ninety
days  old  and  the  factor withholds are reserved of 10% of the uncollected and
unrepurchased  accounts.  The  factor  has  a  security  interest  in  accounts
receivable purchased and the Company's obligation to the factor is guaranteed by
the  majority  shareholder  who  is  also  an  officer and another office of the
Company.

Due  primarily to the repurchase feature of the factoring agreement, the Company
accounts for the factored accounts receivable as a secured borrowing rather than
a  sale.  Many  receivables  are not collected within ninety days and have to be
repurchased  by  the Company.  As of March 31, 1998, the total amount due to the
factor  is  $1,894,722.

The  following  schedule  summarizes  the  Company's  long-term debt and capital
leases.

<TABLE>
<CAPTION>
                                          Balance at
            Description                     3/31/98
----------------------------------------  -----------
<S>                                       <C>
Stockholder Notes Payable                 $         0
Notes Payable and Capital Leases Payable    8,002,522
                                          -----------
                                          $ 8,002,522
                                          ===========
</TABLE>

                                       10
<PAGE>
ITEM  2.     Management's  Discussion  and  Analysis  or  Plan  of  Operation


OVERVIEW
--------

During the first quarter of 1998, ESCO Transportation began to implement changes
in the Company's administrative processes in an effort to improve profitability.
Most  of  these  changes  were  completed  by  the  end of the quarter; however,
management  believes  the  impact  of these changes will not be reflected in the
Company's  financial  statements  until  the  later  quarters  of  1998.

Some  of  the  more  significant  changes  were  as  follows:

The  Company  completed  a  factoring agreement with Commercial Billing Services
Inc. of Decatur, Alabama, an affiliate of Compass Bank.  Under this arrangement,
the  effective  rate  for  the  cost  of  funds  will  be reduced and management
anticipates  substantial savings.  This agreement also automates the information
transfer  process  that  should  reduce  administrative  costs.

The  Company  also  discontinued  discounting  invoices for two of the Company's
larger  customers  which  should  result  in  net  savings  to  the  Company.

Also during the first quarter of 1998, the Company began aggressively collecting
delinquent  receivables.  While  most  of  these collected funds will not become
available until the second quarter of 1998, all indications are that the Company
can  expect  improved  cashflow  as  a  result  of  these  collections.

By  the  end  of  the  first  quarter,  the  Company  had already experienced an
improvement  in its cash and payable positions relative to the previous quarter.
The  Company fully intends to continue its strategy of cost reduction as well as
revenue enhancement to further improve the Company's overall financial position.

The  Company's  Board of Directors has decided during this first quarter of 1998
to  acquire  the  operations  of  a  Tennessee corporation, Intermodal Logistics
Company,  Inc.  (ILC),  which  should  facilitate  its  expanding  market in the
mid-Southern states.  ILC was acquired for a total purchase price of $337,900 in
April  1998  with  a  combination  of  cash,  debt  assumption,  and stock.  The
acquisition  was  accounted  for  as  a  purchase.

The  Board  of  Directors  has directed the Company's management to additionally
review various alternate bids for insurance companies to control rising costs of
insurance.  The  containment  of  insurance  costs  will directly results in net
savings  to  the  Company.

                                       11
<PAGE>
ITEM  2.     Management's  Discussion  and  Analysis  or  Plan  of  Operation
(Continued)


SAFE  HARBOR
------------

This report on Form 10-Q or 10-QSB (the Report) contains certain forward-looking
statements  within  the meaning of Section 27A of the Securities Act of 1933, as
amended,  and  Section  21E  of the Securities Exchange Act of 1934, as amended,
which are intended to be covered by the safe harbors created thereby.  Investors
are  cautioned that all forward-looking statements necessarily involve risks and
uncertainty,  including,  without  limitation, the risk of a significant natural
disaster,  the  expansion  or  contraction in its various lines of business, the
impact  of inflation, the impact of Year 2000 issues, the ability of the Company
to  meet its debt obligation, changing licensing requirements and regulations in
the  United  States  pertinent  to  its  business, the ability of the Company to
expand  its  businesses, the effect of pending or future acquisitions as well as
acquisitions  which  have  recently been consummated, general market conditions,
competition,  licensing  and  pricing.  All statements, other than statements of
historical  facts,  included  or  incorporated  by  reference in the Report that
address  activities,  events  or  developments  that  the  Company  expects  or
anticipates will or may occur in the future, including, without limitation, such
things as future capital expenditures (including the amount and nature thereof),
business  strategy  and  measures  to  implement  such  strategy,  competitive
strengths,  goals,  expansion,  and  growth  of  the  Company's  businesses  and
operations,  plans,  references  to  future success, as well as other statements
which  includes  words  such  as  "anticipate,"  "believe,"  "plan," "estimate,"
"expect," and "intend" and other similar expressions, constitute forward-looking
statements.  Although  the  Company believes that the assumptions underlying the
forward-looking  statements  contained  herein  are  reasonable,  any  of  the
assumptions  could over time prove to be inaccurate and, therefore, there can be
no  assurance  that  the forward-looking statements included in this Report will
themselves  prove  to  be  accurate.  In  light of the significant uncertainties
inherent  in  the  forward-looking  statements included herein, the inclusion of
such  information  should  not be regarded as a representation by the Company or
any  other person that the objectives and plans of the Company will be achieved.

                                       12
<PAGE>
PART  II.     OTHER  INFORMATION

ITEM  1.     Recent  Developments  in  Legal  Proceedings


As  of  the  date  of  filing  hereof,  October 18, 1999, ESCO Transportation is
involved  in  the  following  litigation:

Case  No.  EDVC 98-22ORT (VAPx); Intercargo Insurance Co. v. Burlington Northern
Santa  Fe  Railroad,  it  al.;  In  the U.S. District Court, Central District of
California.

     Intercargo Insurance Company is suing multiple defendants because a load it
     insured  was  misdelivered  at  the  railyard  to  persons  who  stole  the
     merchandise.   Defendant   Burlington  Northern  &  Santa  Fe  Railway  has
     cross-claimed   against   multiple   other   defendants,   including   ESCO
     Transportation,  for indemnity.  ESCO  Transportation  never had custody or
     control of the stolen  merchandise.  ESCO  Transportation has answered both
     Intercargo's claim and Burlington's cross-claim.  ESCO Transportation seeks
     its  reasonable  and necessary  defense costs by asserting that the actions
     were not brought  with  reasonable  cause and in the good faith belief that
     there  is  a  justifiable   controversy  under  the  facts  and  law.  ESCO
     Transportation  is seeking a dismissal  of the claims  against it. There is
     currently a mandatory settlement  conference scheduled for October 18, 1999
     at which Company management will be present.

     The Company's  management  does not believe that this  litigation will have
     any material impact on the Company's business.

Case  No.  98-0840-1;  Pacific  Business Capital Corp v. ESCO Transportation Co.
and  Michael  Till,  Individually;  in  the Chancery Court of Shelby, Tennessee.

     Pacific  Business sued ESCO  Transportation  and Mike Till in an attempt to
     enforce  a  security  interest  it holds  in some  property  of  Intermodal
     Logistics Co. ESCO  Transportation  took over the operations of Intermodal,
     which is more fully  described  in the 1997 10K  previously  filed with the
     SEC. The security interest granted Pacific Business by Intermodal  concerns
     chattel paper,  mainly receivables and right to receivables.  The agreement
     between  ESCO   Transportation   and   Intermodal   specifically   excludes
     receivables  due  and  owing  prior  to  the  date  of the  agreement,  and
     Intermodal retained all rights to those funds. It is ESCO  Transportation's
     and Mike Till's position that they have not violated any security  interest
     Pacific Business may have; ESCO Transportation and Mike Till seek dismissal
     as expeditiously as possible.

     The Company's  management  does not believe that this  litigation will have
     any material impact on the Company's business.

                                       13
<PAGE>
PART  II.    OTHER  INFORMATION  (CONTINUED)


ITEM  2.     Changes  in  Securities  -  NONE

ITEM  3.     Defaults  Upon  Senior  Securities  -  NONE

ITEM  4.     Submission  of  Matters  to  a  Vote  of  Security  Holders  - NONE

ITEM  5.     Other  Information  -  NONE

ITEM  6.     Exhibits  and  Reports  of  Form  8-K  -  NONE

                                       14
<PAGE>
                                   Signatures


Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has  been  signed below by the following persons on behalf of the Registrant and
in  the  capacities  and  on  the  date  indicated:

ESCO  Transportation  Co.


________________________________               ______________________________
Edwis  L.  Selph,  Sr.                         Date
President/Chief Executive Officer


________________________________               ______________________________
Edwis  L.  Selph,  Jr.                         Date
Secretary/Treasurer

                                       15
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