Dive Brief:
- J.B. Hunt Transport Services reported that Q4 operating income for its intermodal segment spiked 16% year over year to $135.5 million, driven by efficiency initiatives and a more balanced network leading to fewer empty container moves, the carrier said in a Jan. 15 earnings press release.
- However, revenues for the segment fell 3% to $1.55 billion due to a 2% drop in YoY intermodal volume and a 6% decrease in transcontinental network loads, the company said.
- The company still sees opportunity for growth as its eastern market loads increased 5% during the quarter, Darren Field, EVP and president of intermodal, said during a call with analysts. The carrier credited the growth to the value proposition offered to customers and continued highway-to-rail conversion.
Dive Insight:
Finding operational efficiencies remains a priority for J.B. Hunt as the industry works through a prolonged weak freight market.
Ongoing global economic uncertainty fueled by tariffs has impacted long-term planning across supply chains, analysts recently told Trucking Dive. For the trucking industry, it has affected seasonal and long-term demand forecasting.
J.B. Hunt President and CEO Shelley Simpson said on the earnings call that the company was not standing by waiting for market conditions to improve and commended employees who “have delivered in a really tough environment.”
In its intermodal business, which represented 50% of the carrier’s overall Q4 revenue, revenues per load fell 1% resulting from changes in mix of freight, customer rates and fuel surcharge revenue, per the release.
As part of J.B. Hunt’s response to the challenging market conditions, the carrier reduced its container storage cost and established better pricing from third-party drayage providers.
Carriers are seeking signs that freight demand is returning. Analysts on the call pointed to potential tailwinds from consumer spending that may benefit from a government projected $370 billion boost in tax refunds.
In response, EVP of Sales and Marketing Spencer Frazier said that J.B. Hunt has been talking to customers about how they’re preparing for a possible seasonal spike. While a short-term boost from heightened consumer spending would be welcomed, understanding customers’ forecasts is a priority, he said.
“We're talking to them right now about how the rest of Q1 is going to shake out and any other changes that they have as we go through the winter season into the spring lawn and garden and then obviously through the summer,” Frazier said.
