Walmart is getting hurt by the crisis plaguing the trucking industry

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Walmart is getting hurt by the crisis plaguing the trucking industry

truck driver

David McNew/Getty Images

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  • Walmart's first-quarter margins were pressured by increased transportation costs.
  • The trucking industry is getting squeezed by higher wages, driven by a shortage of drivers.
  • The retailer also said higher fuel prices were pinching margins.
  • Walmart said in its earnings call it will be vigilant about those cost increases.
  • Watch Walmart trade in real time here.

Walmart's first-quarter earnings topped Wall Street estimates, but the retailer was unable to avoid the sting of a crisis that's hurting several industries: rising transportation costs.

The retail giant reported earnings of $1.14 a share, better than the expected $1.12. But those numbers would have been better if not for the 23-basis-point hit to gross margins caused by third-party trucking market-rate pressures and higher fuel costs. Walmart did not break down the direct impact of each.

"We did see a tick up in transportation expenses," Walmart Director of Investor Relations Kary Brunner said on the company's conference call. He added those "were the primary drivers of the headwind this quarter."

Transportation costs, especially trucking fees, have increased notably this year thanks to rising wages and fuel expenses.

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A shortage of truck drivers has sent wages soaring as competition amongst trucking companies for those drivers heats up. The median salary for a truckload driver working a national, irregular route has risen by 15% since 2013, a survey from the American Trucking Association, a trade group, showed.

And rising fuel prices aren't helping either. Diesel prices in the US have increased from $2.57 in May of 2017 to to $3.24 in May of 2018, a 26% increase, according to the Titi Tudorancia Bulletin.

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Titi Tudorancia

Walmart pointed out the transportation costs have been a running concern for several quarters. "Over the last couple of quarters you've seen transportation expenses called out," Brunner said. This is clearly something worth paying attention to in the quarters ahead.

Walmart is down 14.5% this year.

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