Why J.B. Hunt just warned investors that rising fuel costs are about to hurt profits

J.B. Hunt Transport Services is warning investors that rapidly rising fuel and driver costs will cut into its third-quarter earnings. CFO Brad Delco said the company now expects earnings to decline 5% to 10% from the second quarter, compared with analyst expectations for sequential growth.

The warning sent J.B. Hunt shares sharply lower as investors focused on the growing cost pressure. But the fuel story is more complicated than simply saying diesel is expensive, because the company’s surcharge system can take time to catch up with sudden price increases.

Why did J.B. Hunt warn about falling earnings?

J.B. Hunt expects third-quarter earnings to decline 5% to 10% sequentially as higher fuel and driver costs pressure its results. The company said the expected costs include at least $10 million from fuel and about $25 million in additional driver-related expenses.

The warning came during the Morgan Stanley Laguna Industrials Conference, where Delco described the current fuel-price swings as unusually large. Analysts had been expecting third-quarter earnings to increase sequentially, making the company’s new outlook a significant change from the previous expectations.

The fuel pressure is arriving while diesel prices have climbed rapidly across the United States. The Energy Information Administration reported a national average diesel price of $6.285 per gallon on Sept. 14, compared with $5.967 a week earlier and $5.599 on Aug. 31.

That means J.B. Hunt is dealing with more than a high fuel price alone. The speed of the increase matters because transportation companies can incur the higher expense before their customer pricing mechanisms fully adjust.

Driver costs are also adding to the pressure at the same time. J.B. Hunt is spending more on recruiting, training, and other driver-related costs as it expands capacity to handle stronger demand in parts of its freight network.

The result is a short-term squeeze between rising operating expenses and the company’s ability to recover those costs through customer pricing. That helps explain why management warned investors before the quarterly results are released rather than waiting for the normal earnings report.

How do fuel surcharges protect J.B. Hunt?

J.B. Hunt uses fuel surcharge programs with most of its customers to recover a large portion of higher fuel costs. The company’s 2025 annual report says these programs generally use national, regional, or local fuel prices and can adjust as frequently as weekly.

That system can reduce the long-term effect of higher diesel prices on the company’s business. However, the surcharge formulas can include mileage-per-gallon assumptions and minimum price changes that must occur before additional surcharge revenue is generated.

The timing creates a problem when diesel prices move sharply higher. J.B. Hunt explains that the lag between a fuel-cost increase and the related revenue adjustment can negatively affect operating income during periods of rapidly rising fuel prices.

This is why the current situation cannot be explained simply by saying that J.B. Hunt passes fuel costs to customers. The company can recover much of the increase over time while still taking a temporary earnings hit when prices move faster than its surcharge mechanisms.

There is another reason the fuel surcharge numbers can be difficult to interpret. J.B. Hunt says a significant portion of fuel-related costs in its intermodal operations is included in payments to railroads, dray carriers and other third parties rather than appearing entirely as its own fuel expense.

That means comparing fuel surcharge revenue directly with the company’s reported fuel expense can give an incomplete picture. The more useful question is how quickly fuel costs are changing and how effectively J.B. Hunt’s contracts can recover those changes.

Fun fact: Shares of J.B. Hunt (JBHT) were down nearly 13% in recent trading, leading decliners in the S&P 500 after executives warned higher driver and fuel-related costs are going to squeeze its results this quarter.

Could higher fuel prices also help intermodal?

Higher fuel prices can create a benefit for J.B. Hunt’s intermodal business because customers may look for transportation options that use less fuel than traditional trucking. J.B. Hunt said its intermodal demand increased as customers faced higher fuel prices and limited driver and transportation capacity.

Intermodal is especially important because it represents a large part of J.B. Hunt’s business. In the second quarter, the segment generated $1.75 billion in revenue, up 22% from a year earlier, while operating income rose 58% to $150.9 million.

Intermodal volume increased 10% during the quarter, with growth across both J.B. Hunt’s transcontinental and Eastern networks. The company said the segment’s value proposition became stronger for customers dealing with higher fuel prices and constrained driver availability.

That creates an unusual situation for J.B. Hunt. The same fuel-price increase that raises costs for parts of its transportation network can make intermodal service more attractive to customers trying to control their overall shipping expenses.

The second-quarter results show why investors may want to watch more than the company’s fuel bill. J.B. Hunt reported total operating revenue of $3.50 billion, up 19% year over year, while operating income increased 32% to $259.5 million.

Those numbers do not remove the current fuel pressure, but they show that the company entered the latest warning from a period of strong operating growth. The key question is whether intermodal demand and higher freight volumes can continue offsetting some of the cost pressure if diesel prices remain elevated.

Why are driver costs rising at the same time?

J.B. Hunt is also facing about $25 million in additional driver-related expenses during the third quarter. The company has been adding drivers and investing in capacity as freight demand improves in areas such as intermodal transportation.

Those expenses can include recruiting, training, and incentives associated with bringing additional drivers into the business. While they reduce near-term earnings, they are connected to the company’s effort to support higher transportation volumes.

The timing makes the situation more complicated for investors. J.B. Hunt is spending more to prepare for demand while simultaneously paying more for diesel and dealing with the delayed recovery of fuel costs through customer surcharges.

The company has also been managing other operating expenses across its transportation network. Its second-quarter results showed higher purchase transportation costs and equipment-related expenses, although stronger revenue and productivity helped drive higher operating income.

This means the current earnings warning should not be viewed as a fuel-only event. Fuel is a major part of the immediate pressure, but labor, equipment, purchased transportation, and broader freight-market conditions can all influence how much of that pressure reaches the bottom line.

The next earnings report should provide more information about whether these costs are mainly a short-term adjustment or part of a longer period of higher operating expenses. J.B. Hunt currently lists Oct. 15, 2026, as its expected date for reporting third-quarter results.

Fun fact: The company passes the cost of fuel onto its customers, but the surcharges are delayed. That means J.B. Hunt is left paying the bill until the fees catch up.

What happens if diesel prices stay high?

The biggest concern would be a prolonged period of high diesel prices rather than a short-lived spike. J.B. Hunt says it has historically recovered a majority of higher fuel costs through surcharges, but it also warns that it cannot predict how much of future fuel-price increases will be recovered.

If diesel prices remain elevated, the timing problem could become less important than the broader effect on freight customers. Businesses facing higher transportation costs may eventually reduce shipments, adjust inventory plans, or look for different ways to move goods.

That could affect trucking demand if high transportation costs begin changing customer behavior. At the same time, intermodal could become more attractive because it gives shippers another option when highway transportation becomes more expensive.

The latest EIA data shows why the situation deserves attention. U.S. retail diesel increased from $5.599 per gallon on Aug. 31 to $6.285 on Sept. 14, while the latest weekly petroleum report said the Sept. 14 price was $2.546 higher than the same week a year earlier.

J.B. Hunt’s own disclosures also show that fuel prices are only one part of its operating risk. The company identifies factors including driver availability, equipment costs, insurance, interest rates, freight conditions and other market changes as potential influences on its results.

For that reason, investors may want to watch several indicators instead of focusing only on the price of diesel. Fuel prices, surcharge recovery, intermodal volumes, driver costs, freight demand and operating margins will help show whether the current pressure is fading or becoming more persistent.

What should investors watch next?

The most important number to watch is how J.B. Hunt’s actual third-quarter results compare with the warning management has now provided. The company has already signaled that earnings could fall 5% to 10% sequentially, so investors will be looking for evidence of how much fuel and driver costs contributed to the change.

Diesel prices will remain another important indicator because the surcharge system does not immediately eliminate the effect of sudden price movements. J.B. Hunt’s annual report specifically says the lag can hurt operating income when fuel prices rise rapidly and can have the opposite effect when prices fall.

Intermodal performance will also deserve close attention. Strong volume growth could provide some support if customers continue shifting freight toward intermodal because of high fuel prices and constrained capacity in other transportation modes.

The company’s cost structure will provide another important clue. Investors can compare fuel-related pressure with driver expenses, equipment costs, and purchased transportation to see whether the earnings impact is concentrated in fuel or spreading across several parts of the business.

The bigger issue is whether J.B. Hunt can continue growing volumes while absorbing unusually high operating costs. Its second-quarter results showed strong revenue and operating-income growth, but the latest warning demonstrates how quickly changing fuel conditions can alter the near-term earnings picture.

J.B. Hunt’s warning therefore goes beyond a simple story about expensive diesel. It highlights how rapidly rising fuel prices, delayed surcharges, higher driver expenses, and shifting freight demand can collide at the same time, making the company’s upcoming results an important test of how its transportation network handles the cost shock.

TL;DR

• J.B. Hunt expects third-quarter earnings to fall 5% to 10% sequentially as fuel and driver costs rise.
• The company expects at least $10 million in fuel-related pressure and another $25 million in driver expenses.
• Fuel surcharges help J.B. Hunt recover higher diesel costs, but they can lag when prices rise quickly.
• U.S. diesel reached $6.285 per gallon on Sept. 14, up sharply from $5.599 on Aug. 31.
• Higher fuel costs could also make J.B. Hunt’s intermodal service more attractive to customers seeking lower transportation costs.
• The bigger issue is whether the fuel shock remains temporary or starts weighing on freight demand and margins for longer.

This article was made with AI assistance and human editing.

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