The earnings declines were blamed on high diesel fuel costs. Over the summer quarter, the highway price rose 23 cents a gallon nationally and almost 40 cents on the West Coast. At the beginning of the summer, most energy forecasts expected diesel prices to be steady or slightly down over the summer.
M.S. Carriers expects to earn 34 to 45 cents per share, compared to the analysts' average estimate of 58 cents. Marten Transport warned that its earnings will be in the 41 to 45 cent per share range, down from 46 cents a year earlier. Similarly, U.S. Xpress expects only 10 to 12 cents per share compared to 14 last summer.
There were a few exceptions. Swift expects to meet the analysts' average estimate of 31 cents a share. Landstar expects earnings, excluding non-recurring charges, to be within the range of
analyst's estimates of $1.40 to $1.53 per share for the quarter.
And Roadway reported for the quarter ended in early September that profits were up 12.4% from a year ago on a sales gain of only 7.2%. The company credited its 9% increase in revenue per ton that offset a 1.7% dip in tonnage.
The sharp fuel price increase was due to a large gain in worldwide oil demand from a rapidly growing world economy, some speculation, labor disputes disrupting European refineries and the planned diversion of 1 million barrels of distillate -- much of it destined to be diesel fuel -- to a winter home heating oil reserve for the Northeast.
The energy forecasts again predict slowly declining diesel prices through 2001. Don't count on it. Oil inventories are too low to absorb sudden demand or supply shocks. Prices may average lower but will be very volatile, making carriers margins equally volatile.
Earlier, truck manufacturers and major component suppliers warned of depressed third quarter profits because carriers and fleets had cut back on orders. Suppliers will be taking an even bigger hit than carriers. They have two additional profit problems. Truck production will remain below sales until surplus inventories are used up, and European profits have to be discounted 20% for the depreciation of the Euro currency.