Trucking and logistics stocks sold off broadly Wednesday after J.B. Hunt Transport Services Inc. (JBHT) warned that record diesel prices and a scramble for drivers will knock third-quarter profit down 5% to 10% from the second quarter.

Shares of the Arkansas-based carrier tumbled 13% to $237.48, the steepest one-day decline since March 2020.

The warning didn't stay contained, rippling through the sector and pulling competitors down.

Diesel At $6.31 Is The Whole Story

The national average price of diesel hit $6.31 a gallon Wednesday, up 6.2% in a week, 15.9% in a month and 70.5% from $3.70 a year ago, according to the AAA.

Regular gasoline, by comparison, is up 37.1% over the same span. The burden is falling disproportionately on freight.

The recent surge follows the shutdown of Saudi Arabia's East-West pipeline, which drove West Texas Intermediate crude above $106 a barrel this week.

Carriers have spent the year passing fuel costs to customers through surcharges. J.B. Hunt's warning is the clearest signal yet that the pass-through is no longer keeping pace.

Where The Model Broke

Roughly half of J.B. Hunt's quarterly revenue comes from intermodal, where freight moves by two or more transport modes.

Intermodal contracts reprice on a lag of about two quarters, a structure that works fine when input costs drift, and badly when they spike.

JB Hunt's CFO Brad Delco described "some of the most radical and abnormal swings" in fuel prices the company has ever experienced.

Management guided to a fuel headwind of nearly $10 million sequentially, roughly $25 million in incremental driver-related costs as it ramps hiring, sign-on bonuses and pay raises, plus higher claims expense.

Baird analysts said the company was "slower than they should have been" in raising rates and "overly reliant" on cutting operating costs.

Morgan Stanley struck a more constructive note, indicating the cost pressure should be at least partially offset by improving volumes.

3 Firms Trim Price Targets on JBHT, Keep Ratings

7 Freight Names To Watch

The read-through hit every corner of surface transport, with asset-light brokers and truckload carriers taking the hardest knocks:

• RXO Inc. (RXO), down 4.6%
• Knight-Swift Transportation Holdings Inc. (KNX), down 4.2%
• Schneider National Inc. (SNDR), down 4.2%
• XPO Inc. (XPO), down 3.3%
• Old Dominion Freight Line Inc. (ODFL), down 3.1%
• Landstar System Inc. (LSTR), down 2.7%
• C.H. Robinson Worldwide Inc. (CHRW), down 2.5%.

The broader iShares Transportation ETF (IYT) fell 1%, to its lowest level since mid-May.