J.B. Hunt Transportation Services Inc. is doubling the size of its 2021 fleet order in an effort to keep pace with surging customer demand.
The Lowell, Ark.-based transportation and logistics provider will buy 12,000 container units and 3,000 trailers. The increased order size will result in $1.25 billion of capital expenditures during the current fiscal year, up from the company’s original guidance of $850 million to $900 million.
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"Our customer demand is significant," said Bradley Hicks, executive vice president and president of highway services at J.B. Hunt.
The need for rail and trucks began to pick up last summer as COVID-19 lockdowns lifted, causing retailers and manufacturers to restock depleted inventories. Demand is expected to remain strong as more people are vaccinated and the economic reopening forges ahead.
That could put further strain on J.B. Hunt and the rest of the industry, which last quarter had to grapple with disruptions caused by rail congestion and winter storms.
Additionally, the industry is facing the "most challenged driver market" in the 37 years as the pandemic and other factors resulted in 220,000 fewer available drivers, according to J.B. Hunt COO Nicolas Hobbs.
J.B. Hunt is not concerned the driver shortage will result in an oversupply of containers on the market,
"We've made this decision knowing that we could fully utilize those containers that we announced," Hicks said.
J.B. Hunt on Thursday evening reported first-quarter revenue rose 15% year over year to $2.622 billion. Net earnings were $104.8 million, or $1.37 per share, up from 98 cents the prior year.
Shares were up 24% this year through Thursday, outperforming the S&P 500’s 11% gain.