Trucker J.B. Hunt Will Add to Fleet in 2017

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 [e-mail]

(END) Dow Jones Newswires

November 08, 2016 18:05 ET (23:05 GMT)

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