Dive Brief:
- A 3% volume gain, calculated cuts and improved productivity fueled a 21% year-over-year jump in operating income for J.B. Hunt Transport Services intermodal segment, the carrier reported Wednesday. That's the first time that both metrics improved YoY since Q3 2022.
- The carrier reported intermodal Q1 operating income of $114.5 million. Revenues for the quarter totaled $1.5 billion, up 2% YoY, per the release.
- "We set a record for first quarter volume," EVP and Intermodal President Darren Field said on an analysts’ call Wednesday. "The strength in demand was broad-based among customers and across the network."
Dive Insight:
Field said the company is seeking ways to grow its intermodal business, adding “that’s our plan in J.B. Hunt is grow into our excess capacity.”
“We think our network can support up to 20% more volume,” he said. “I don’t think we’re necessarily talking about taking capacity out as much as we’re talking about growing into our prefunded capacity investments that we’ve made.”
The recent spike in fuel costs and tightening trucking capacity has made conversion to rail an attractive option, Field said. The carrier set a weekly company volume record in March with over 46,000 loads delivered, he said.
TD Cowen in an April 16 analyst note said tighter OTR capacity and higher energy prices bode well for intermodal shipments, adding that it expects J.B. Hunt to build upon its record-setting week from March into the spring. Uber Freight’s Q1 Market Update Report also noted plentiful intermodal capacity and competitive pricing create a situation where lower rates should be locked in before they start increasing.
Field said for the quarter, the carrier’s intermodal volumes were up overall from a year ago. Broken down by month, he said volume was down 1% in January, but up 1% in February, and jumped 8% in March. The carrier saw a 7% volume gain in its eastern intermodal network, while its transcontinental load volume was flat YoY.
“We continue to see strong rail service from all of our rail providers,” Field said. “The railroads are confident service levels can be maintained even in a period of sustained volume growth.”
The carrier reported 536,852 intermodal loads in Q1, up from 521,821 a year ago. Its average effective training equipment usage was 108,084 units, up from 107,725.
Field said the carrier has pre-funded its capacity needs and is ready to meet customer growth demand.
“Our focus on operational excellence and industry-leading service are competitive advantages that further differentiate us for customers,” he said. “As we have stated before, we have long-term intermodal solutions for our customers in any operating environment.”
