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Yahoo
22-05-2025
- Business
- Yahoo
J.B. Hunt and Eastern and Canadian railways see steady intermodal volume
NEW YORK – The reduction in U.S.-bound shipments from China after steep tariffs were imposed in April has yet to show up in J.B. Hunt's intermodal volumes. 'Our volumes have been steady,' J.B. Hunt (NASDAQ: JBHT) Intermodal President Darren Field told an investor conference on Tuesday. Importers rushed to beat tariff deadlines earlier this year, then paused shipments after tariff hikes were announced on April 2 and have resumed ordering goods from China after a 90-day pause in the trade war was announced two weeks ago. Tariffs that were as high as 145% on Chinese goods now sit at 30% — at least temporarily. The trade whipsaw created the expectation that there would be an 'air pocket' in international container volume arriving at U.S. ports this month, and that intermodal volume would decline as a Field says there's no single, simple answer to how tariffs have affected J.B. Hunt's intermodal customers. 'There's customers that are down, there are some that are up, there's a whole bunch that are just kind of normal,' he said. 'So there's still a little bit of wait and see for us, and we're encouraged by our dialogue with the customers.' J.B. Hunt's eastbound moves out of Southern California — home to the busiest port complex in the U.S. at Los Angeles and neighboring Long Beach — consist predominantly of goods transloaded from international containers. The company is the largest domestic intermodal operator. In many cases, Field says, retail inventory can sit in warehouses for days, weeks or even months before being shipped inland to BNSF Railway terminals in Texas, Chicago or Kansas City, Missouri.A relatively small percentage of that volume makes its way east of Chicago via interchange with Norfolk Southern (NYSE: NSC) and CSX (NASDAQ: CSX), Field says. Growth in the East has been outpacing J.B. Hunt's Western traffic. 'You know, it's been one of the real success stories we feel like over the last year has played out for us in that both of our Eastern rail providers are really doing a great job for us,' Field said. 'Norfolk Southern and CSX have been good partners and have delivered a great service product. We've worked together to talk about what we need to do, to sustain service, high service quality for our customers moving forward.' Field says overall rail service is the best it's been in 10 years. 'Really all of our providers are excellent,' he said. ' We're thrilled with where we're at on rail service.' And that has helped J.B. Hunt convert freight to intermodal at a time when its customers are under increasing pressure to reduce transportation costs. NS Chief Financial Officer Jason Zampi says East Coast ports are regaining market share that was lost to the West Coast amid labor and supply chain upheaval, which has helped the railroad's international intermodal volume hold up. 'We really haven't seen a drop-off in that yet, and our domestic business is staying pretty steady,' Zampi told the investor conference on Tuesday. If there is an import cliff, Zampi says, it will be more pronounced on the West Coast and there will be less of an impact at the East Coast ports that NS serves. Eastern rival CSX shares the same view. ''Cliff' is a strong word,' CSX Chief Commercial Officer Kevin Boone told the expects to see some softness in its port business, but pre-stocking of inventory will boost domestic intermodal volume and help offset any international lull, he says. The magnitude of the international swoon is up for debate, Boone says, but CSX's customers say they expect a rebound in July and August. Meanwhile, CSX this week announced faster transit times for 50 intermodal lanes effective June 2. CN CEO Tracy Robinson says Prince Rupert, British Columbia — the railway's key port for Chinese imports bound for Chicago and the Midwest — has seen its container volume growth accelerate this year despite the trade war. The port has been recovering market share lost to U.S. West Coast ports during labor disruptions at CN (NYSE: CNI) and British Columbia ports over the past couple of years. Gemini, the alliance of Maersk and Hapag-Lloyd, is now calling on Prince Rupert, which has helped boost volumes, too. CN and Gemini are positioning the port as the fastest and most efficient way to get Asian goods to the Midwest due to a combination of shorter sailing time, lower on-dock dwell and express service from Rupert to Chicago. 'We do remain optimistic there will be trade deals between the U.S. and most countries,' Robinson told the conference. CPKC CEO Keith Creel says his railroad, which derives just 1% of its revenue from shipments related to China, will not experience a drop in international intermodal traffic. 'We're not looking at a cliff,' he said. 'We've got a tremendous amount of demand that's coming to discharge in the Canadian ports,' Creel said of traffic bound for inland points in Canada. Much of that is from Gemini, which aims to have its ships arrive on schedule – a rarity for ocean carriers. 'They put an alliance together based on what I would call PSR steamship service that matches up with the PSR railroad service,' Creel said, referring to the railway's precision scheduled railroading operating model. With ships running on time, CPKC (NYSE: CP) can better plan its train departures from Vancouver, British Columbia. 'So far, they've been in service now for two months. They're 100% on time,' Creel said. CPKC also handles Gemini business at ports in Mexico and eastern Canada. The executives spoke at the Wolfe Research 18th Annual Global Transportation & Industrials Conference. The post J.B. Hunt and Eastern and Canadian railways see steady intermodal volume appeared first on FreightWaves. Sign in to access your portfolio
Yahoo
22-04-2025
- Business
- Yahoo
JB Hunt faces shipper caution in contract negotiations
This story was originally published on Trucking Dive. To receive daily news and insights, subscribe to our free daily Trucking Dive newsletter. Shippers are taking longer to execute contracts as they take a more cautious approach to an uncertain market plagued by rising tariffs, executives at J.B. Hunt Transport Services said on a Q1 2025 earnings call. The company is still in 'bid season' for its intermodal business and expects to lock in several larger contracts over the next few months, according to Darren Field, president of intermodal. However, it has had only 'modest success' in lowering rates while retaining existing business. The wait-and-see approach from shippers mirrors behavior during similar periods of economic uncertainty such as the Great Recession, according to Michael Zimmerman, partner in the strategic operations practice of global management consulting firm Kearney. J.B. Hunt's contracting process takes roughly 18 months to close, according to Brad Hicks, president of dedicated contract services. But the timing of when deals sign and close will drive the company's ability to return to positive revenue and operating income growth in 2025. In Q1, revenue for the carrier dropped 1% to $2.92 billion, while operating income dropped 8% to $179 billion. The revenue decline was driven by dips across most of the carrier's segments, including dedicated contract services, integrated capacity solutions, final mile and truckload. The caution from shippers to close contracts comes during a time of fluctuating tariff policy. President Donald Trump paused most country-specific tariffs for 90 days earlier this month while raising duties on imports from China to a combined 145%. The administration has also levied sector-specific duties, with more promised. Shippers are planning for multiple scenarios as they determine how tariffs will influence their short- and long-term business strategies, said Spencer Frazier, EVP of sales and marketing at J.B. Hunt, on the earnings call. 'As part of this scenario planning process, some customers are considering ways to alter supply chain freight flows and/or their country of origin sourcing, but these changes will be part of a much longer decision process,' Frazier said. The wait-and-see approach has been a common tactic for shippers, but most larger companies prefer locking in their annual contracts with rates and capacity assurance, according to Kearney's Zimmerman. 'We believe this phenomenon is a negotiation strategy where shippers, in the face of major carriers that are warning them that rates will head up and capacity will again become scarce, are holding out for better rates,' Zimmerman told Trucking Dive. Against this backdrop, carriers are trying to steer shippers away from the low spot market, which has been on a gradual downward trend in early 2025, according to Zimmerman. 'It's a classic tug of war and the evidence today favors the shippers and the carriers are proving stubborn and so you get a standoff,' Zimmerman said. Shippers have previously shown similar caution when the economy is entering or in a recession, he added, pointing to the Great Recession as an example. 'The situation today is exacerbated by the fact that carriers enjoyed high rates in 2020 Q4 to Q1 2022 and the market has headed down since Q1 2022 and the recovery of the market has been delayed,' Zimmerman said. 'So, carrier optimism is running up against spot market rate reality.' During the week of April 6, spot rates across all modes dipped, per DAT data, even for the flatbed sector, which had inched up since early February. The decrease was due to tariff uncertainty and tighter capacity, Ken Adamo, DAT chief of analytics, said in an email. Shippers also worry tariffs could further elevate shipping prices during a time of high inflation. Driving down costs for shippers and its own operations in such a volatile market has been a challenge for J.B. Hunt, according to President and CEO Shelley Simpson. 'Here we've come into now finishing up our third year of a freight recession with meaningful pressure to reduce costs from our customers and you've seen that in the work that we've been doing trying to eliminate costs, but the inflation that's coming alongside that, I can't think of a single cost item that is actually down through this freight recession,' Simpson said on the earnings call. 'So that's very unlike anything we've ever experienced.' Recommended Reading JB Hunt revenues shrink but Q4 profit margin improves Sign in to access your portfolio
Yahoo
16-04-2025
- Business
- Yahoo
JB Hunt Transport Services Inc (JBHT) Q1 2025 Earnings Call Highlights: Navigating Challenges ...
Revenue: Declined 1% year-over-year. Operating Income: Decreased 8% compared to the prior year quarter. Diluted EPS: Decreased 4% year-over-year. Intermodal Volumes: Up 8% year-over-year, setting a first-quarter volume record. Net Capital Expenditures: Expected to be between $500 million to $700 million for 2025. Stock Repurchase: $234 million repurchased during the first quarter, with $650 million remaining on authorization. New Senior Notes Issued: $750 million issued to extend debt maturity. Truck Sales in Dedicated Segment: Approximately 260 trucks sold in the first quarter. Customer Count in ICS: Increased by more than 20% compared to the first quarter last year. Warning! GuruFocus has detected 6 Warning Signs with JBHT. Release Date: April 15, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. JB Hunt Transport Services Inc (NASDAQ:JBHT) achieved record first-quarter intermodal volumes, indicating strong demand and operational excellence. The company has successfully reduced people costs by over $200 million through headcount attrition and performance management. JB Hunt Transport Services Inc (NASDAQ:JBHT) has a strong safety culture, with further improvements in key safety metrics and a significant safety accomplishment in their maintenance team. The company has a strong brand and customer sentiment, receiving several awards during the quarter. JB Hunt Transport Services Inc (NASDAQ:JBHT) has a diverse set of customers and a strong pipeline in their dedicated segment, with approximately 260 trucks of new deals sold in the first quarter. Revenue declined by 1%, operating income decreased by 8%, and diluted EPS decreased by 4% compared to the prior year quarter, primarily due to lower yields and inflationary cost pressures. The company faces inflationary cost headwinds, including noticeable increases in insurance premiums for the third consecutive year. Demand for big and bulky products in the Final Mile segment remains muted, with weak demand for furniture, exercise equipment, and appliances. The truckload market continues to exceed demand, leading to competitive pricing pressures. The uncertain macro environment and trade policy remain top concerns for customers, impacting supply chain strategies and potentially affecting future demand. Q: Can you provide an update on the intermodal bid season and whether you expect rate increases in 2025? A: Darren Field, Executive Vice President and President of Intermodal, mentioned that while the environment remains competitive, they have achieved some rate increases and filled some empty legs. However, they have also lost some business due to disciplined pricing. The mix of business, particularly growth in the Eastern network, will influence revenue per unit. Q: How are you managing costs given the uncertain demand and visibility into volume? A: Shelley Simpson, President and CEO, explained that they are focused on growing and repairing margins while being fluid with scenario planning. They are considering cost management, stock buyback strategies, and prudent capital spending to align with changing conditions. Q: What are your thoughts on the potential impact of tariffs and pull-forward on volume growth? A: Spencer Frazier, Executive Vice President of Sales and Marketing, noted that while customers are scenario planning, the uncertain macro environment could create opportunities for JB Hunt to optimize supply chains. Darren Field added that they have not seen significant pull-forward from customers, but they remain cautious and adaptable. Q: How are you addressing the competitive landscape in the dedicated market? A: Brad Hicks, Executive Vice President and President of Highway Services, stated that the dedicated market remains competitive, particularly in renewals. However, JB Hunt's value proposition in private fleet conversions, driver recruitment, and operational excellence differentiates them from competitors. Q: What are the prospects for intermodal margin improvement through the rest of the year? A: Darren Field emphasized that while they are not providing specific guidance, they are focused on executing for customers, finding efficiencies, and growing volumes in the right corridors at the right rates to improve margins. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
15-04-2025
- Business
- Yahoo
J.B. Hunt's intermodal bid season delivers mixed results
J.B. Hunt Transport Services said it has seen mixed results so far this intermodal bid season, capturing rate increases and adding volume in some empty lanes of the network while also losing business to competitors as it remains disciplined and tries to up its freight mix. The Lowell, Arkansas-based company's intermodal head, Darren Field, said on a Tuesday evening call with equity analysts that J.B. Hunt (NASDAQ: JBHT) has had 'only modest success in repairing rates while retaining existing business.' The company is getting rate increases in headhaul markets while walking from lower-margin business in other areas. A changing tariff landscape has the management team contemplating multiple volume scenarios. Roughly 20% to 30% of its intermodal volume comes off the West Coast, but it didn't say how much of that freight originates in China. Field said there hasn't been a notable change in demand indications from customers. Most customers also haven't said they pulled forward freight ahead of recent tariff implementations, which if they have, would create a void in demand later this multimodal transportation provider reported first-quarter earnings per share of $1.17 after the market closed Tuesday. The result was 3 cents ahead of the consensus estimate but 5 cents lower year over year. Of note, earnings estimates for transportation companies have been coming down in recent weeks as trade risks rise and as March failed to live up to typical seasonality. J.B. Hunt's first-quarter consensus estimate moved from $1.42 90 days ago to $1.14 ahead of the print. Consolidated revenue of $2.92 billion was 1% lower y/y. Operating income fell 8% y/y to $179 million. Higher costs (insurance and claims, medical insurance, and maintenance) were the culprits. The company slightly beat its guidance calling for a 20% to 25% sequential decline in operating income for the period. Intermodal revenue of $1.47 billion was 5% higher y/y as the company reported record first-quarter volumes. Total loads increased 8% as transcontinental loads were up 4% and shipments in the Eastern network were up 13%. Loads were up 9% y/y in January, 6% in February and 7% in March. That compared to a 9% y/y increase in total intermodal traffic on the U.S. Class I railroads during the quarter, according to the Association of American Railroads. Revenue per load declined 2% y/y (down just 1% from the fourth quarter). A higher growth rate in the East was a modest drag on yields given the shorter length of haul. The company still has some large bids to be negotiated in the coming segment recorded a 93.6% operating ratio (inverse of operating margin), which was 90 basis points worse y/y. Average loads per container were off 4% y/y, and operating income per load fell 14%. The company didn't commit to margin improvement in the unit this year given the difficult operating environment that's being further complicated by trade uncertainty. 'We wanted to get the business on a trajectory to see an improvement in our margins in 2025, and we still have a long way to go to know if we will be successful or not,' Field said. The dedicated segment reported a 4% y/y revenue decline to $822 million. Average trucks in service fell 5%, but revenue per truck per week increased 2% (up 4% excluding fuel surcharges). Severe winter weather was a headwind in the quarter, and J.B. Hunt's lawn and garden customers haven't seen the typical 'spring surge.' It sold service on 260 dedicated trucks in the period, but the timing of future deals will dictate if it returns to net fleet growth this year. Those additions will also determine if the company is able to grow operating income. A 90.2% OR in the unit was 110 bps worse y/y. The brokerage unit reported a 6% y/y revenue decline to $268 million. Total loads fell 13% but revenue per load increased 8%. The unit booked a $2.7 million operating loss, which was the smallest of this downcycle as both loads per employee and gross profit per employee increased 18% and 36% y/y, respectively. Shares of JBHT were off 5.8% in after-hours trading on Tuesday. More FreightWaves articles by Todd Maiden:March freight demand enters, exits like a lamb Amazon launches inbound-only LTL service Forward Air flags 10% to 15% revenue impact from new tariffs The post J.B. Hunt's intermodal bid season delivers mixed results appeared first on FreightWaves. Sign in to access your portfolio
