Railroad, Trucking Shares May Dip in 4Q, Analyst Says

J.P. Morgan transport analyst Thomas Wadewitz lowered his fourth-quarter earnings estimates for six major railroads by an average of 2.8% and cut his estimates for three truckload companies by an average of 8.7%, the Associated Press reported.

The most significant estimate reductions were for truckload carrier Werner Enterprises and freight rail line CSX Corp., AP reported.

Among transportation companies, truckload carriers are being hurt most by higher diesel prices with only about 80% of fuel expenses covered by surcharges, Wadewitz said.

Railroads’ fuel expense is mostly covered by surcharges, but reimbursements are often delayed by as much as two months, which is likely to hurt the quarter’s results, Wadewitz wrote.

Fourth-quarter earnings are expected to be weak across the sector with railroad companies posting the best results, Wadewitz said, according to AP.

Truckload and less-than-truckload carriers’ earnings reports may be the weakest, as slumping demand and poor pricing compounds fuel issues, he wrote.