“Labor, labor, labor.”
That’s been the biggest challenge for trucker J.B. Hunt Transports Services Inc.
not only because it needs more drivers to deliver more goods to and for its customers, but because its customers also need more people to unload the trucks.
Chief Executive John Roberts said Friday on a conference call with analysts following third-quarter results that in 2021, the company reached “all-time highs” in the need for drivers in all of its business segments, as well as job openings in office and field teams.
““It’s never been more difficult than it is today to find and attract and retain qualified drivers.””
— CEO John Roberts
But it isn’t just labor, as prices for rail and truck purchase transportation expenses, equipment costs and fuel prices have all increased, as have the unplanned costs to deal with supply chain disruptions and inefficiencies.
And although the Federal Reserve continues to insist that “elevated” inflation largely reflects “transitory factors,” J.B. Hunt Chief Commercial Officer Shelley Simpson said she believes it’s something the company will have to deal with from now on.
““[T]he underlying cost of drivers, equipment, that is going to stay. I don’t see in this environment taking driver wages down or customers taking their own wages down. Our equipment is not getting any cheaper.””
— CCO Shelley Simpson
Simpson said that the base cost will continue, “and that is going to be our new norm,” but added that the company and its customers will keep working to make the supply chain more efficient and more “predictable.”
When UBS analyst Tom Wadewitz asked that as the company has talked about “labor, labor, labor being the constraint,” if there were any particular labor elements that were most challenging, Chief Operating Officer Nicholas Hobbs answered:
““I would just say on the labor situation, it’s across the board; it’s maintenance, taxis, drivers. There’s going to be tremendous pressure on wages. I see that continuing on for quite some time, all throughout the supply chain.””
— COO Nicholas Hobbs
CEO Roberts said what’s the most difficult to project is how well J.B. Hunt’s customers are dealing with labor challenges at their warehouses: “And that’s where there is a significant bottleneck, is our customers’ ability to unload the demand that they have.”
As much as J.B. Hunt expressed concern about dealing with these long-term challenges, investors didn’t seem to care, as the growth in demand more than offset the rise in costs.
The stock soared 8.7% to a record close of $190.55, enough to pace the S&P 500 index’s
gainers. The stock has run up 12.2% in the past week, the biggest weekly gain since it hiked up 16.4% during the week ended May 29, 2009.
Earlier Friday, the company reported third-quarter profit and revenue that rose above expectations, as all of its business segments contributed to growth.
Although total operating expenses jumped 25.0% from a year ago, including a 19.8% increase in salaries, wages and employee benefits, revenue growth was even stronger at 27.2%, while net income leapt 59.2%.