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J.B. Hunt warns on 3Q
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September 18, 2001: 10:22 a.m. ET
Transport firm blames lower freight demand, higher costs for earnings miss
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NEW YORK (CNNfn) - J.B. Hunt Transport Services Inc. warned Tuesday that third-quarter results are likely to fall sharply below Wall Street estimates as a result of lower freight demand and higher costs.
For the current quarter, Hunt (JBHT: down $2.29 to $17.21, Research, Estimates) now anticipates earnings of 5 cents a share instead of the 28 cents a share forecast by analysts, according to earnings tracker First Call. The company earned 26 cents a share in the year-ago quarter.
J.B. Hunt's shares lost about 10 percent of their value in trading early Tuesday.
The Lowell, Ark.-based company is the nation's second-largest that handles trailer-size freight shipments, known as the truckload sector, trailing only privately-held Schneider National. Hunt moves an unusually high percentage of its customers' freight on the rails, using containers that can move on rail cars or trucks.
The company said that while load volume in July and August was as expected, it reflected an economy close to a recession and was insufficient to offset costs. It said the trucking industry has too much capacity despite failures of smaller trucking companies during the last year.
"The combination of lower load volumes and soaring costs in the industry has thinned the ranks of providers, but the balance of supply and demand remains tilted toward excess capacity," Hunt said.
The company said its freight rates are 3.1 percent above year-ago levels, but that does not match increases in insurance, equipment and fuel costs. It is seeking a 10 percent increase for next year to try to get back in the black.
"Insurance companies began pulling away from the transportation industry earlier in the year and have followed up with extremely large price increases forcing most carriers to re-evaluate both the level of self insurance and, in some cases, the upper limit of coverage," Hunt said.
In addition, the company said it is being hit by the steep drop in the value of used trucks, which increases the ownership cost of equipment by cutting the trucks' residual value. 
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J.B. Hunt
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