NEW YORK — Domestic intermodal service is running at historically low levels, with trains routinely arriving a day or two behind schedule, J.B. Hunt executives say.
“We never saw numbers like this before the pandemic,” Darren Field, J.B. Hunt’s intermodal president, told an investor conference this week. “It’s really a labor and crew issue for our rail providers.”
BNSF Railway is J.B. Hunt’s railroad partner in the west, while Norfolk Southern is its primary carrier in the east.
Service has yet to improve from levels seen in the second quarter as conductor hiring is going more slowly than the railroads expected. “And at this point it feels like we’re months away from getting it better, and that’s probably a 2023 story,” Field says.
“If we can get velocity picked up, it unlocks a lot of pent-up demand for intermodal service,” Field says. “Our shippers continue to tell us they want more from intermodal, but they need better service.”
Precision Scheduled Railroading operational changes have not brought about service improvements, Field says, and have instead pushed railroads away from their customers.
J.B. Hunt is encouraged by discussions with the new CEOs at BNSF and NS, both of whom are focused on growth. “Both of those leaders … care about what our customers have to say,” Field says of BNSF’s Katie Farmer and NS’s Alan Shaw, who previously served in marketing roles at their railroads.
Looking longer term, J.B. Hunt believes there are several major ways it can boost intermodal volume: Through economic growth, conversion of highway traffic to intermodal, increased transloading of international imported cargo at its facilities on the east and west coasts, and gaining market share.
But the biggest thing that will drive growth, Chief Financial Officer John Kuhlow says, is J.B. Hunt’s renewed partnership with BNSF.
The companies announced in March that they will significantly boost intermodal capacity in the next few years by adding containers, chassis, and well cars while expanding terminals and their capabilities.
J.B. Hunt will increase the size of its container fleet by 40% within the next three to five years, bringing it to as many as 150,000 53-foot boxes.
Ongoing service problems have made BNSF and Hunt cautious about announcing new initiatives, with the exception of a new intermodal terminal in Tacoma, Wash.
“We have to educate customers on what we are doing to expand capacity. It can’t be only about J.B. Hunt buying containers,” Field says. “We need the railroad to talk more about what they’re doing. The announcement in Tacoma was a great step and a signal to our customer base that we’re serious and that they are doing things differently. I mean, when was the last time a railroad actually announced the opening of a new terminal for lift capacity? That’s a great story and we’re going to launch service there next week.”
The Hunt executives spoke this week at the Deutsche Bank 2022 Transportation Conference.
