J.B. Hunt Transport Services Inc. has reached an agreement with Freightliner LLC for a truck sale and trade package for 2003 that will see the transportation company purchase about 2,100 trucks from Freightliner in a one-for-one trade-in of older vehicles.
The package includes a variety of truck and engine types and will result in a significant reduction in the average age of the company's fleets, particularly in the company's Intermodal and Dedicated Contract Services (DCS) business segments.
As a result of the trades, the company anticipates a reduction in maintenance expenses for 2003. The agreement will increase net capital expenditures to about $200 million for the year from the previous estimate of $150 million. Based on company projections and current cash balance, the company does not expect the additional capital expenditures to create net additional borrowings for the year. The package is for trades only and will not result in capacity additions to the fleet. About 450 tractor additions that had been delayed from 2002 to 2003 have now been further delayed until 2004 as a result of the new agreement.
Not only will the agreement reduce the average age of the Intermodal and DCS tractor fleets, allowing more effective driver recruiting and retention, it will also help the company stabilize and control its maintenance costs longer term, according to J.B. Hunt.
Further, this agreement will allow the company the ability to customize truck and engine selection to fit the specific need of the Intermodal or DCS project.
The replacement trucks for Intermodal and DCS will be delivered primarily during the first half of 2003 and the majority of the units will be equipped with Mercedes MBE4000 engines. The MBE4000 and its predecessor engine have been in production for several years and have been used successfully around the world in similar applications.
The Intermodal and DCS business units will retire the majority of their COE (cab-over) tractors in exchange for conventionals. The company's goal of providing best-in-class service to its customers will also be enhanced by the significant lowering of the average age of the Intermodal and DCS fleets by reducing both scheduled and non-scheduled downtime for repairs. Replacement trucks for the truck business segment will not be delivered until the third quarter of 2003, delaying any significant acceptance of the new EPA mandated heavy-duty engines.
The company says rate increases will be required to offset the significant increase in costs due to the government's EPA regulatory compliance once the new engines are in the fleet.
J.B. Hunt Transport Services operates more than 10,750 trucks and about 46,000 trailers and containers.
The package includes a variety of truck and engine types and will result in a significant reduction in the average age of the company's fleets, particularly in the company's Intermodal and Dedicated Contract Services (DCS) business segments.
As a result of the trades, the company anticipates a reduction in maintenance expenses for 2003. The agreement will increase net capital expenditures to about $200 million for the year from the previous estimate of $150 million. Based on company projections and current cash balance, the company does not expect the additional capital expenditures to create net additional borrowings for the year. The package is for trades only and will not result in capacity additions to the fleet. About 450 tractor additions that had been delayed from 2002 to 2003 have now been further delayed until 2004 as a result of the new agreement.
Not only will the agreement reduce the average age of the Intermodal and DCS tractor fleets, allowing more effective driver recruiting and retention, it will also help the company stabilize and control its maintenance costs longer term, according to J.B. Hunt.
Further, this agreement will allow the company the ability to customize truck and engine selection to fit the specific need of the Intermodal or DCS project.
The replacement trucks for Intermodal and DCS will be delivered primarily during the first half of 2003 and the majority of the units will be equipped with Mercedes MBE4000 engines. The MBE4000 and its predecessor engine have been in production for several years and have been used successfully around the world in similar applications.
The Intermodal and DCS business units will retire the majority of their COE (cab-over) tractors in exchange for conventionals. The company's goal of providing best-in-class service to its customers will also be enhanced by the significant lowering of the average age of the Intermodal and DCS fleets by reducing both scheduled and non-scheduled downtime for repairs. Replacement trucks for the truck business segment will not be delivered until the third quarter of 2003, delaying any significant acceptance of the new EPA mandated heavy-duty engines.
The company says rate increases will be required to offset the significant increase in costs due to the government's EPA regulatory compliance once the new engines are in the fleet.
J.B. Hunt Transport Services operates more than 10,750 trucks and about 46,000 trailers and containers.
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