J.B. Hunt made a mint off fuel surcharges, report says

| 10/27/2006

Ever wanted to knock $2 a gallon off what you pay for diesel?

That's pretty much what J.B. Hunt Transport did in the third quarter of 2006 with an aggressive fuel surcharge program.

The trucking company reported "record" net earnings of $57.8 million, a 12-percent improvement over the 2005 third quarter revenue. But a closer look by transportation analyst Donald Broughton of A.G. Edwards and Sons pointed to what some could consider a "record" fuel surcharge collection.

J.B. Hunt officials reported collecting $124 million in fuel surcharges. The company paid $119.6 million in fuel costs and taxes. That means the company made roughly $4.46 million more in fuel surcharges than it paid in fuel costs and taxes.

But, the company didn't really keep all of that.

Broughton broke the numbers down in an Equity Research Recent Development Report, in which he downgraded J.B. Hunt's stock to an aggressive/sell position.

The trucking company has a revenue sharing agreement with intermodal partner Burlington Northern Santa Fe. Broughton estimated that J.B. Hunt paid the rail partner approximately $26 million of the fuel surcharges collected.

Another $7 to $8 million was passed on to owner-operators leased to the company.

That left $90 million for the company. Broughton applied that toward what was spent on fuel and estimates that in reality, J.B. Hunt paid approximately 60 cents per gallon for diesel in the third quarter.

According to prices reported by the U.S. Energy Information Administration, diesel at the pump averaged $2.92 per gallon during the third quarter.

- By Jami Jones, senior editor