Page 1 of 9

                              UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549


                                FORM 10-Q


(Mark One)

/ X /     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT    OF 1934
  
For the quarterly period ended           December 31, 1997                

                                   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     1-10105   

                           MATLACK SYSTEMS, INC.                          
         (Exact name of registrant as specified in its charter)


    DELAWARE                                             51-0310173       
(State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                       Identification No.)


One Rollins Plaza, Wilmington, Delaware                        19803      
(Address of principal executive offices)                     (Zip Code)

                              (302) 426-2700                              
          (Registrant's telephone number, including area code)

                                                                         
                       (Former name of registrant)

     Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 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   X     No _____

     The number of shares of the registrant's common stock outstanding as
of December 31, 1997 was 8,787,162.
<PAGE>
FORM 10-Q                                                     Page 2 of 9
                     PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

     The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.  In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. 
Operating results for the quarter ended December 31, 1997 are not
necessarily indicative of the results that may be expected for the year
ended September 30, 1998.  These statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended September 30, 1997.

B.   Earnings Per Share
     Pursuant to the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share," the number of weighted average
shares used in computing basic and diluted earnings per share (EPS) are as
follows (in thousands):


                                      Three Months Ended
                                         December 31,    
                                     1997           1996

     Basic EPS                       8,786          8,757
     Effect of option
      exercises (assumed)              115             41
     Diluted EPS                     8,901          8,798

     No adjustments to net income available to common stockholders were
required during the periods presented.

FORM 10-Q                                                     Page 3 of 9

                          MATLACK SYSTEMS, INC.
                   CONSOLIDATED STATEMENT OF EARNINGS
               ($000 Omitted Except for Per Share Amounts)


                                                         Quarter Ended
                                                          December 31,  
                                                         1997      1996 

Revenues                                               $62,509   $54,557

Operating expenses                                      53,194    46,595
Depreciation                                             3,267     3,212
Selling and administrative expenses                      4,369     4,357
Other (income) expense                                    (393)      (14)
                                                        60,437    54,150

Operating earnings                                       2,072       407

Interest expense                                         1,039       740

Earnings (loss) before income taxes (benefit)            1,033      (333)
Income taxes (benefit)                                     434       (61)
   
Net earnings (loss)                                    $   599   $  (272)

Earnings (loss) per share
  Basic                                                $   .07   $  (.03)
  Diluted                                              $   .07   $  (.03)

Average common shares outstanding (000)
  Basic                                                  8,786     8,757
  Diluted                                                8,901     8,798

Dividends paid per share                                 None      None

FORM 10-Q                                                     Page 4 of 9

                          MATLACK SYSTEMS, INC.
                       CONSOLIDATED BALANCE SHEET
                             ($000 Omitted)


                                               December 31,  September 30,
               ASSETS                             1997          1997  
Current assets
  Cash                                          $  2,868      $  2,524
  Accounts receivable, net of allowance for
    doubtful accounts: December-$489;
    September-$583                                31,252        30,417
  Inventories                                      6,048         5,895
  Other current assets                             4,663         3,036
  Deferred income taxes                              780         1,066
      Total current assets                        45,611        42,938

Property and equipment, at cost, net of 
  accumulated depreciation of: 
  December-$129,727; September-$128,216           97,573        99,106
Other assets                                         455           218
     Total assets                               $143,639      $142,262
   
     LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable                              $  8,691      $  8,320
  Accrued liabilities                              7,053         9,583
  Income taxes payable                               905           590
  Current maturities of long-term debt             6,780         6,831
      Total current liabilities                   23,429        25,324

Long-term debt                                    46,815        42,778
Insurance reserves                                 2,308         3,176
Other liabilities                                  1,966         1,860
Deferred income taxes                             10,935        11,567

Commitments and contingent liabilities
  See Part II Legal Proceedings

Shareholders' equity:
  Preferred stock, $1 par value,
    1,000,000 shares authorized; issued and
    outstanding - None
  Common stock, $1 par value, 
    24,000,000 shares authorized; 
    issued and outstanding: 
    December-8,787,162 and 
    September-8,778,149                            8,787         8,778
  Capital in excess of par value                  10,553        10,532
  Retained earnings                               38,846        38,247
      Total shareholders' equity                  58,186        57,557
      Total liabilities and 
        shareholders' equity                    $143,639      $142,262

FORM 10-Q                                                     Page 5 of 9

                          MATLACK SYSTEMS, INC.
                  CONSOLIDATED STATEMENT OF CASH FLOWS
                             ($000 Omitted)

                                                         Quarter Ended 
                                                          December 31, 
                                                        1997      1996 

Cash flows from operating activities:
  Net earnings (loss)                                  $   599   $  (272)
  Adjustments to reconcile net earnings (loss)
    to net cash used in operating activities:
    Depreciation and amortization                        3,273     3,218
    Net gain on sale of property and equipment            (393)      (14)
    Changes in assets and liabilities:
       Accounts receivable                                (835)   (1,288)
       Inventories and other assets                     (2,017)   (2,323)
       Accounts payable and accrued liabilities         (2,159)   (2,086)
       Current and deferred income taxes                   (31)      485 
       Other, net                                         (762)      194 
Net cash used in by operating activities                (2,325)   (2,086)

Cash flows from investing activities:                            
  Purchase of property and equipment                    (2,731)   (6,178)
  Proceeds from sale of property and equipment           1,384       291
Net cash used in investing activities                   (1,347)   (5,887)

Cash flows from financing activities:
  Proceeds of long-term debt                            18,917    15,300
  Repayment of long-term debt                          (14,931)   (8,742)
  Exercise of stock options                                 30        20
  Common stock acquired and retired                       -          (76)
Net cash provided by financing activities                4,016     6,502 
   
Net increase (decrease) in cash                            344    (1,471)
Cash beginning of period                                 2,524     3,019
Cash end of period                                     $ 2,868   $ 1,548

Supplemental information:
  Interest paid                                        $ 1,046   $   827
  Income taxes paid (recovered)                        $   465   $  (546)


<PAGE>
FORM 10-Q                                                     Page 6 of 9

Item  2.  Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations:  Quarter Ended December 31, 1997 vs. Quarter Ended
December 31, 1996

     Revenues for the quarter ended December 31, 1997 increased by
$7,952,000 (14.6%) to $62,509,000 compared with $54,557,000 during the same
quarter last year.  Increased demand for transportation services in the
chemical industry due to rail service interruptions, the impact of recent
acquisitions and additional new business contributed to the higher
revenues.  The number of bulk trucking loads carried increased by 14.5% and
average miles per load increased by 3.8%.  The Company's non-bulk trucking
revenues, which represented almost 17% of the Company's revenues, increased
by 15.8%.

     Operating expenses increased by $6,599,000 (14.2%) and reflected the
increase in revenues.  Drivers' wages increased by $3,035,000 and other
compensation costs increased by $582,000 during the quarter.  Fuel expense
increased by $464,000 reflecting the increase in miles driven, partially
offset by the effect of lower fuel prices.  Equipment maintenance expense
increased by $769,000 and reflected the higher level of business and costs
associated with bringing certain recently acquired equipment up to Company
specifications.  Terminal expenses increased by $758,000 and all other
operating expenses increased by $961,000 reflecting the higher level of
business and costs associated with integrating recently acquired facilities
and equipment.

     Depreciation expense increased by $55,000 (1.7%) reflecting the
Company's continued investment in operating equipment.  In large part, the
increase in depreciation has slowed as certain of the Company's assets have
become fully depreciated.

     During the quarter, the Company realized proceeds from the sale of
property and equipment of $1,384,000, which resulted in a gain of $393,000. 
A large portion of the proceeds and substantially all of the gain resulted
from the sale of the Company's Portland, Oregon terminal in late December
for approximately $1,200,000.

     Selling and administrative expenses remained essentially unchanged
between the first quarter of fiscal year 1998 and the same quarter last
year.  The stabilization of these expenses resulted from continued cost
containment efforts and the elimination, during fiscal 1997, of a region-
alized management structure related to the Company's operations.  As a
percentage of revenues, these expenses were 7.0% in 1997 and 8.0% in 1996.

     Interest expense increased $299,000 (40.4%) reflecting higher interest
rates and the Company's higher level of indebtedness, a large portion of
which was incurred during the fourth quarter of fiscal 1997.

     The effective income tax rate was 42.0% for the first quarter of
fiscal year 1998.  For the first quarter of fiscal year 1997, the effective
rate of income tax benefit was 18.3%.  The low effective rate of benefit
was caused by the impact that non-deductible expenses had upon the tax
computations.  

FORM 10-Q                                                     Page 7 of 9

     Net earnings for the quarter were $599,000 or $.07 per diluted share
compared with a net loss last year of $272,000 or $.03 per diluted share. 
The increase in net earnings reflects the higher level of revenues. 
Revenues and operating expenses in the first quarter related to the
business formerly operated by Arrow Transportation Company of Portland,
Oregon were approximately $3,000,000.  Earnings were negatively impacted by
transition and integration costs associated with Arrow, which included
driver hiring and training and certain equipment repositioning.  The
integration of Arrow substantially was completed by the end of the first
quarter.

Liquidity and Capital Resources

     During the first quarter of fiscal 1998, the Company financed its cash
outflow from operating activities and capital expenditures with increased
borrowings under its revolving credit agreement and equipment term loans. 
At December 31, 1997, a total of $1,200,000 was available to the Company
under its revolving credit facility.

     In recent years, the Company incurred a net cash outflow from
operating activities during the first fiscal quarter, when payments for
annual insurance premiums and the prior fiscal year's incentive
compensation liability are made.  Normally, subsequent quarters provide a
cash inflow from operating activities, which the Company expects for the
remainder of fiscal 1998.

     Otherwise, there were no material changes in the Company's financial
condition and its liquidity and capital resources since September 30, 1996. 
For further details, see pages 5 through 7 of the Company's 1997 Annual
Report to Shareholders on Form 10-K for the year ended September 30, 1997.

Forward-Looking Statements

     The Company may make forward-looking statements relating to
anticipated financial performance, business prospects, acquisitions or
divestitures, new products, market forces, commitments and other matters. 
The Private Securities Litigation Reform Act of 1995 provides a safe harbor
for forward-looking statements.  In order to comply with the terms of the
safe harbor, the Company notes that a variety of factors could cause the
Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements.  Forward-looking statements typically contain
words such as "anticipates", "believes", "estimates", "expects",
"forecasts", "predicts", or "projects", or variations of these words,
suggesting that future outcomes are uncertain.  

     Various risks and uncertainties may affect the operations,
performance, development and results of the Company's business and could
cause future outcomes to differ materially from those set forth in forward-
looking statements, including the following factors:  general economic
conditions, competitive factors and pricing pressures, shift in market
demand, the performance and needs of industries served by the Company,
equipment utilization, management's success in developing and introducing
new services and lines of business, potential increases in labor costs, 

FORM 10-Q                                                     Page 8 of 9

potential increases in equipment, maintenance and fuel costs, uncertainties
of litigation, the Company's ability to finance its future business
requirements through outside sources or internally generated funds, the
availability of adequate levels of insurance, success or timing of
completion of ongoing or anticipated capital or maintenance projects,
management retention and development, changes in Federal, State and local
laws and regulations, including environmental regulations, as well as the
risks, uncertainties and other factors described from time to time in the
Company's SEC filings and reports.


                       PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

     There are various claims and legal actions pending against the
Company.  In the opinion of management, based on the advice of counsel, the
outcome of such claims and litigation will not have a material adverse
effect upon the Company's financial position or results of operations.

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 on Form 8-K

     None.

FORM 10-Q                                                     Page 9 of 9


                               SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.


DATE:    January 28, 1998                MATLACK SYSTEMS, INC.      
                                               (Registrant)


                                   /s/ G. J. Trippitelli            
                                   G. J. Trippitelli 
                                   President and Chief Executive Officer


                                   /s/ P. J. Bagley                 
                                   Patrick J. Bagley    
                                   Vice President-Finance and Treasurer 
                                   Chief Financial Officer
                                   Chief Accounting Officer