Fuel Costs Hurt Truck Profits
Truckers are watching their profits erode as diesel prices continue to climb. Two of the biggest operations — FDX Corp. and J.B. Hunt Transport Services — have told investors that high fuel costs have cut into their earnings.
Fuel prices have risen steadily since spring, when the Organization of the Petroleum Exporting Countries agreed to limit production of crude oil (9-20, p. 7). OPEC reaffirmed the quotas at a recent meeting and said it will stay the course until March 2000.
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Last week, as the national average price spiked upward by 1.7 cents to $1.226 a gallon, the highest since March 10, 1997, analysts said the steady rise will put the thumbscrews to the entire industry’s profits.
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Alan B. Graf, executive vice president of FDX, Memphis, Tenn., reported that higher fuel prices cut operating income for the company’s first quarter by $27 million and said if current trends continue, fuel prices could negatively affect operating income in fiscal 2000 by more than $150 million compared with the same period this year.
