Hub Group lowers third quarter earnings forecast

Intermodal, highway and logistics services provider Hub Group Inc. said this week that it is lowering its expected earnings per share for the third quarter to be between $0.48-$0.51, down from previous Wall Street expectations ranging from $0.52-$0.57. And it also lowered full-year 2013 earnings to $1.85-$1.95 from $2.02.

By ·

Intermodal, highway and logistics services provider Hub Group Inc. said this week that it is lowering its expected earnings per share for the third quarter to be between $0.48-$0.51, down from previous Wall Street expectations ranging from $0.52-$0.57. And it also lowered full-year 2013 earnings to $1.85-$1.95 from $2.02.

The Downers Grove, Ill.-based company cited various factors negatively impacting earnings, including:
-a challenging intermodal pricing environment that resulted in price increases that were lower than anticipated;
-unfavorable intermodal traffic mix, including soft demand for freight shipping from the West Coast, less new business than expected in truck brokerage due to intense competition from asset-based carriers; and
-unfavorable business mix in truck brokerage due to a decline in demand for high value-added services.

Hub’s third quarter earnings call is schedule for Thursday, October 17.

Stifel Nicolaus analyst John Larkin wrote in a research note that a challenging intermodal price environment and traffic mix impacted Hub’s intermodal franchise and likely impaired margins.

“Softness in pricing and demand should have been evident, given the slowing price environment for truckers and negative intermodal volume on Union Pacific’s network exhibited in 3Q13,” he wrote. “However, management was adamant that 2H13 volumes would be up in the mid- to high-single digits; although that may still be the case, softer freight demand from the West Coast and lower than expected price increases most likely led to margin compression.”

The analyst added that Hub’s truck brokerage results were impacted by increased competition from asset-based carriers and an unfavorable mix, and he also stated that Hub represents the fifth freight transportation company to announced lowered earnings expectations for the third quarter.

Given the spate of companies doing so, he brought up the point that even with some positive economic points throughout the quarter, there have been anecdotal reports of lackluster freight growth, raising the question of whether the second half of 2013 will resemble the second half of 2012. 

While Hub noted that there is currently a challenging intermodal pricing environment, Hub Vice Chairman and COO Mark Yeager said at the FTR Transportation Conference that intermodal is doing a great job in competing with the truckload market, as well as in taking share.

“Intermodal is on a roll, and domestic intermodal has continued to grow well,” Yeager said. “I think we are seeing a pretty normalized intermodal environment out there that means we are seeing a normal uptick in activity. The West Coast has been solid but nothing [booming] like we saw in the late 90’s and early 00’s. A lot of the strength in intermodal has to do with stability and shipper confidence and consistent and reliable service that offers an opportunity to substantially reduce supply chain costs. As long as intermodal service remains reliable, we are likely to see it continue to take share.”


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

Hub Group · Intermodal · All Topics
Latest Whitepaper
Improving Packaging: The Cost of Shipping Air is Going Up
Retailers and manufacturers that insist on using inefficient and sloppy packaging methods—oversized boxes, inefficient packaging, poorly constructed palletized contents—are paying for their mistakes in sharply higher freight rates. Pitt Ohio White Paper, Logistics White Paper, Dimensional Packaging
Download Today!
From the July 2016 Issue
While it’s currently a shippers market, the authors of this year’s report contend that we’ve entered a “period of transition” that will usher in a realignment of capacity, lower inventories, economic growth and “moderately higher” rates. It’s time to tighten the ties that bind.
2016 State of Logistics: Third-party logistics
2016 State of Logistics: Ocean freight
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....

Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...
Port of Oakland launches smart phone apps for harbor truckers
Innovation uses Bluetooth, GPS to measure how long drivers wait for cargo