J.B. Hunt Outlines Three-Pronged Approach for Intermodal Bid Season
J.B. Hunt Transport Services (JBHT) has announced a three-pronged strategy to optimize its intermodal operations and mitigate market challenges. The plan focuses on:
* Rates Optimization: Aiming for rate increases to improve margins.
* Volume Management: Prioritizing freight that maximizes efficiency and minimizes empty containers.
* Freight Mix Selection: Targeting freight that aligns with the company's network and minimizes repositioning costs.
Despite facing tepid market conditions, J.B. Hunt emphasizes the importance of freight selection as a key factor in driving efficiency. The company recently reported record intermodal volumes but saw a decline in operating margins due to network imbalances and hiring expenses.
J.B. Hunt's long-term intermodal operating margin target remains between 10% and 12%. The company acknowledges that its capacity expansion strategy may have resulted in incremental costs, but it believes the investment will yield positive results over time.
Regarding current demand, J.B. Hunt anticipates further clarification on intermodal rates in May and June. It notes that March is a crucial month. The company emphasizes that recent volume surges are not driven by concerns over tariffs. Some customers are expected to shift truck shipments to rail due to rising one-way truckload rates.
J.B. Hunt remains optimistic, despite the ongoing freight recession, citing positive seasonal trends and an inflection point in the market. The company anticipates a 20%-25% decline in consolidated operating income for the first quarter and expects dedicated account losses to end in the second quarter.
J.B. Hunt continues to invest in its dedicated fleet, targeting a net addition of 800-1,000 trucks annually. The company's 2025 capital expenditures budget excludes trailing equipment purchases. Shares of JBHT experienced a decline of 2.7% in after-hours trading on Thursday, reflecting a wider trend in the transportation sector.