Shares of J.B. Hunt fell sharply by 13% following the company’s forecast that its third-quarter earnings will decline by 5% to 10%. This warning came during the Morgan Stanley Industrials conference, where CFO Brad Delco cited increased costs and volatile fuel prices as key challenges facing the trucking giant. J.B. Hunt anticipates these factors will weigh heavily on its financial results for the period.

Delco outlined that the company is incurring approximately $25 million more in expenses related to recruiting, advertising, onboarding, training, and sign-on bonuses compared to the previous quarter. These elevated costs are part of the company’s strategy to prepare for growth, even as it feels pressure from rising industry costs. Additionally, he noted that fuel prices have experienced “some of the most radical and abnormal swings” ever observed, with record-high diesel costs creating an estimated $10 million headwind for the quarter.

Despite these obstacles, J.B. Hunt expects a sequential improvement in volume to help offset some of the incremental spending and margin pressures. Delco described the current situation as largely a timing issue, expressing that the company has transparent insight into these cost headwinds and is working toward restoring its profit margins. However, he acknowledged that the company faces a long journey ahead to fully repair its margins.

The stock of J.B. Hunt has seen substantial gains over the last year, nearly doubling in value. Nonetheless, the recent earnings warning and the 13% drop in share price underscore investor concerns about the company’s ability to navigate the rapid increases in operational costs and fuel price volatility in the near term. The market reaction highlights the challenges facing J.B. Hunt as it balances growth initiatives with short-term financial pressures.