J.B. Hunt’s Diesel Shock Hits Transportation ETFs: Which Funds Have the Most Fuel-Sensitive Exposure?

The trucking industry’s latest warning is putting transportation ETFs under the microscope as surging diesel prices threaten to squeeze freight carriers’ margins. J.B. Hunt Transport Services Inc (NASDAQ:JBHT) shares plunged 13% on Sept. 16, their steepest one-day decline since March 2020, after the company warned that third-quarter profit could fall 5%-10% sequentially. Management cited nearly $10 million in additional fuel costs and about $25 million in incremental driver-related expenses. The warning came as the national average diesel price reached $6.31 a gallon, up 70.5% from $3.70 a year ago, according to AAA. That matters for ETF investors because transportation funds have meaningful exposure to trucking and other fuel-intensive businesses. See More: Top Momentum Stocks XTN: The Biggest Trucking Angle The SPDR S&P Transportation ETF (NYSE:XTN) has the most direct exposure among the three funds examined. Cargo ground transportation accounts for 33.11% of the portfolio, according to State Street data. J.B. Hunt represents about 2.6% of XTN. Other trucking names include Schneider National Inc (NYSE:SNDR), Werner Enterprises Inc (NASDAQ:WERN), Ryder System Inc (NYSE:R) and Knight-Swift Transportation (NYSE:KNX), giving the fund substantial exposure to the road-freight business. XTN’s equal-weighted structure means the impact is spread across carriers rather than concentrated in one company. But it also means a broad deterioration in trucking margins can affect a relatively large portion of the portfolio. The fund was down almost 2% on Wednesday. IYT Offers a Different Mix The iShares U.S. Transportation ETF (BATS:IYT) has a considerably lower allocation to cargo ground transportation at 18%. Rail transportation makes up 31.85%, while air freight and logistics account for another 16.65%. That makes IYT less directly tied to trucking than XTN, although fuel costs remain relevant across airlines, freight and railroads. The fund lost more than 1% on Wednesday. FTXR Spreads the Risk Further The First Trust Nasdaq Transportation ETF (NASDAQ:FTXR) holds J.B. Hunt at 2.37%. It also owns Knight-Swift at 1.66%, Old Dominion Freight Line Inc (NASDAQ:ODFL) at 1.50%, XPO Inc (NYSE:XPO) at 0.98% and several other trucking companies. But FTXR is much more diversified across the broader transportation ecosystem, with large positions in General Motors Co (NYSE:GM), Union Pacific Corp (NYSE:UNP), Tesla Inc (NASDAQ:TSLA) and United Parcel Service Inc (NYSE:UPS). This is not bad news considering the fund only lost about 0.5% on Wednesday while XTN and IYT lost around 1.5% on average. The bigger concern for transportation ETFs is therefore not simply whether diesel is expensive. It is whether carriers can pass those costs through quickly enough to protect margins. J.B. Hunt’s intermodal contracts can reprice with a lag, leaving operators exposed when fuel costs rise sharply. If diesel remains elevated, the performance gap between transportation ETFs could increasingly come down to how much trucking exposure they carry — and how quickly freight pricing catches up with fuel costs. Read Also: SK Hynix, Intel May Make Memories in Ohio: These ETFs Are Along for the Ride Photo: Shutterstock