J.B. Hunt Anticipates Intermodal Pricing Turnaround
J.B. Hunt Transport Services achieved a record volume of intermodal loads in the third quarter, yet service challenges and rising costs have impacted profitability. Following two years of decreasing yields, the company may be approaching a turning point in pricing. Company executives informed investors on Tuesday at the Stephens annual investment conference in Nashville, Tennessee, that rail service in their Eastern network is performing exceptionally well. However, they are still experiencing disruptions on transcontinental routes due to a surge in West Coast imports. Some shippers expedited their shipments this year to preempt potential extended strikes at East and Gulf Coast ports. Although there was a short labor disruption at the beginning of October, a lasting resolution remains elusive. In the third quarter, J.B. Hunt’s (NASDAQ: JBHT) transcontinental loads increased by 7% year-over-year, with eastbound lanes originating from Southern California seeing double-digit percentage growth. J.B. Hunt's Western rail partner, BNSF (NYSE: BRK.B), reported a 19% year-over-year increase in intermodal container movements during the third quarter and continues to see mid-teen percentage increases in the fourth quarter so far. Container imports at the West Coast's major ports reached their peak in August, with nearly 1.2 million twenty-foot equivalent units, representing a year-over-year increase of over 25%. In contrast, J.B. Hunt's Eastern network experienced only a 3% year-over-year increase in loads during the third quarter. In addition to freight diversions, shorter lengths of haul contributed to this trend.