The latest quarterly results from J.B. Hunt imply that the US surface freight market continues to be tough. For the whole company, revenues year-on-year for the second quarter of 2024 were down 7% to $42.9bn whilst operating income fell 24% to $205.7m.
At the core Intermodal business, volumes fell by 1%, with a mixed picture across market geographies. Transcontinental was up 4% year-on-year but more localised traffic was hit by lower trucking rates. Underlying revenue per load was down 4%. Profits were down 31% due to lower utilisation and lower rates.
‘Dedicated Contract Services’ also saw revenue fall, down by 4% due to lower utilisation of the truck fleet and lower rates. Customers seem to be reducing the size of their fleets and the decreasing number of J.B. Hunt’s own trucks reflects this, with 339 fewer trucks than last year. Higher costs drove down profits to a greater extent than the fall in revenue, with operating income down 15% year-on-year.
The Integrated Capacity Solutions brokerage and management business also reflected tough conditions in its market segment. Revenue fell by 21% despite revenue per load increasing by 5% as volumes fell by 25%. The business’s loss trebled to $13.3m as the fall in costs did not keep up with the fall in business. J.B. Hunt has also had to absorb the brokerage business it bought from BNSF.
The truckload business at J.B. Hunt is comparatively modest but it still has been hit by the market conditions. Truckload saw revenue fall by 12% year-on-year and operating income down 7%. Load volume fell by 9% and underlying revenue per load by 4%.
The one area which did see a better performance was the ‘Final Mile Services’ business. This saw revenue rise 5% and operating income increase 33% year-on-year to $19.8m. Despite some costs rising, the underlying increase in demand for last-mile services drove up underlying profits.
The US road and rail freight market continues to be soft. This is a little surprising as US retail activity is not weak and international trade is strong. However, in contrast to 2022 and 2023, the supply of vehicles and drivers is no longer a problem.
Author: Thomas Cullen
Source: Ti Insight
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