Trucker J.B. Hunt Will Add to Fleet in 2017
November 08 2016 - 6:20PM
Dow Jones News
As weak demand sends new heavy-duty truck orders plummeting, at
least one major carrier is planning to put more vehicles on the
road.
Lowell, Ark.-based J.B. Hunt Transport Services Inc., the
third-largest U.S. trucking company by revenue, expects to add 500
to 700 trucks next year to its dedicated contract services business
managing fleets for retailers and manufacturers. It will add 100 to
120 trucks to its truckload segment, the operation that includes
freight transport for customers in the spot market for trucking
service.
The growth strategy comes as the rest of industry is cutting
back shipping capacity after coping with tepid demand and weak
pricing for much of 2016. Orders for heavy-duty commercial trucks
in North America dropped 46% in October, a bellwether month for the
sector, according to ACT Research.
Companies including Swift Transportation Co., Werner Enterprises
Inc. and Covenant Transportation Group Inc. said they had pulled
hundreds of trucks from service in the third quarter to address
overcapacity and falling shipping prices. But J.B. Hunt added 83
trucks last quarter to its truckload segment, where companies sell
the full capacity on a tractor-trailer to a single shipper.
"It appears as if the strategy management has undertaken in
2016, whereby it continues to add assets despite a depressed market
to gain share, will continue into 2017," said an analyst note from
Stifel on the report.
J.B. Hunt, which had $6.2 billion in revenue in 2015, "remains
one of the few, if not the only, player who can sustainably finance
such a strategy thanks to the expansiveness of its operation and
margin agreements with railroads," the note said.
Even with the additional trucks, overall capital expenditures
are projected to drop to $477 million in 2017 from an estimated
$515 million for 2016, J.B. Hunt's presentation said. The company
lists irrational competitive pricing and customer rate behavior
among as potential risks in the coming year.
SJ Consulting Group, an industry research firm, ranked J.B. Hunt
behind only United Parcel Service Inc. and FedEx Corp. in revenue
from all trucking services last year.
Write to Loretta Chao at loretta.chao@wsj.com
(END) Dow Jones Newswires
November 08, 2016 18:05 ET (23:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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