J.B. Hunt Transport Services CFO Brad Delco warned at the Morgan Stanley Laguna Conference that rising operating costs could push third-quarter earnings down 5-10% sequentially from the second quarter despite strong freight demand, sending JBHT shares down 13.3% on Sept. 16 from Sept. 15's closing level. The company expects driver-related expenses to rise approximately $25 million sequentially, covering recruitment, advertising, onboarding, training, higher compensation and sign-on, retention and safety bonuses, while sharp increases in diesel prices are expected to create at least a $10 million sequential impact in the third quarter as a timing lag between fuel purchases and surcharge collections squeezes margins. Higher accident claims and group medical costs are adding further pressure, and because intermodal pricing typically adjusts more slowly than truckload costs, a near-term mismatch between revenues and expenses is emerging even as J.B. Hunt reports strong intermodal activity, market-share gains and a record pipeline in its Dedicated Contract Services business. The cautious outlook weighed on other truck operators, with Old Dominion Freight Line falling 3.64% and ArcBest Corporation dropping 3.6% on Sept. 16 amid concerns about industrywide cost inflation. J.B. Hunt currently carries a Zacks Rank #3 (Hold).
JB Hunt Transport Services IncCFO warned rising driver, diesel, accident and medical costs could cut Q3 earnings 5-10% sequentially despite strong freight demand.
ArcBest Corp
Old Dominion Freight Line Inc