LOWELL, Ark. — J.B. Hunt yesterday reported lower second-quarter intermodal profits despite higher volume and revenue.
Operating income declined 4%, to $95.7 million, as revenue increased 2%, to $1.44 billion. Gross revenue per load decreased 3% due to changes in mix of freight, fuel surcharge revenue, and lower rates.
As the largest domestic intermodal provider, J.B. Hunt is an industry bellwether. The company’s intermodal volume was up 6% for the quarter, to 525,161 loads, thanks to 15% growth in the highly truck-competitive East, where Norfolk Southern is the company’s primary rail partner. Transcontinental volume, which originates on partner BNSF Railway, was down 1%.
“We want to continue to highlight the strength of our Eastern network volume growth. We compete more directly with truck in this market, and yet with low truck rates and lower fuel prices, we continue to see customers convert highway freight to intermodal,” Intermodal President Darren Field says. “This a result of our combined strong service levels with our rail providers and how that translates into an attractive and valuable cost saving alternative to truck for our customers.”
Demand remained steady during the quarter despite tariff-related supply chain volatility.
“Overall customer demand trended modestly below normal seasonality. As customers adapted to changes in global trade policy, the timing and direction of freight flows were impacted. That said, demand for our intermodal service remained strong,” says Spencer Frazier, executive vice president of sales and marketing. “ We continued to see customers convert more freight to intermodal from the highway as our commitment to operational excellence, keeping freight secure, and our strong safety record differentiates us from the competition.”
J.B. Hunt’s crystal ball remains hazy because its customers say their biggest challenge is accurately forecasting demand amid the upheaval caused by U.S. tariffs.
“Every one of our customers is unique, and specifically in how they’ve adjusted changes in trade policy,” Frazier says. “Some stayed the course, some paused certain items, some pulled inventory forward, and really all of them longer term are considering their sourcing strategies. And that makes for a very dynamic forecasting challenge for them and for us.”
Nonetheless there were signs of changes in the marketplace.
“We completed intermodal bid season with positive pricing for the first time in two years and continued to gain market share, with capacity to grow more,” CEO Shelley Simpson says.
J.B. Hunt had a fleet of 125,265 containers at the end of the second quarter, but average usage was 102,603 during the quarter.
As volume growth skewed toward the East, average intermodal length of haul declined to 1,631 miles compared to 1,689 a year ago.
On a consolidated basis — which includes the contribution of Intermodal and the company’s Dedicated Contract Services, Integrated Capacity Solutions, Final Mile Services, and Truckload segments — J.B. Hunt reported that quarterly operating income declined 4%, to $197.3 million, on flat revenue of $2.93 billion. Earnings per share was flat, at $1.31.
Executives said they have identified $100 million in cost-savings opportunities for the year as profit margins remain challenged.
Intermodal, J.B. Hunt’s largest segment, generated 49% of the company’s revenue and operating income for the quarter.
It’s interesting to see that those TOFCs in the pic. are actually COFCs mounted on chassis trailers.