About the segment
J.B. Hunt’s Dedicated Contract Services (or DCS) segment focuses on private fleet conversion and creation in final-mile delivery and replenishment. The segment also provides specialized equipment and services that are not generally provided by common truckload carriers due to strict service requirements, specialized equipment, and intense driver and delivery personnel demands.
To explore this segment further, please read J.B. Hunt’s Dedicated Contract Services segment.
Financial performance in 4Q14
J.B. Hunt Transportation’s DCS segment saw a strong 10% year-over-year revenue growth to $363 million for the fourth quarter of 2014. This was primarily driven by rate increases implemented during the past nine months and more activity for customer accounts. For the full year 2014, revenues grew at 13% year-over-year, comparable to the growth seen in the previous fiscal year.
J.B. Hunt’s operating income grew 25% year-over-year for the fourth quarter driven by increase in revenues, improved asset utilization, less reliance on outsourced power units, and benefits from rapidly declining fuel costs. This was partially offset by continued higher costs for driver hiring and retention, increased insurance and claims costs, and higher worker compensation costs. For the full year, the operating income grew at 6% year-over-year, bettering last year’s negative growth.
J.B. Hunt added net 473 revenue-producing trucks to the existing fleet by the end of 4Q14, which was driven by new contract implementations in the current and prior periods. The average length of haul declined for the quarter as well as for the full year. On the other hand, the average load grew for both periods.
J.B. Hunt Transportation’s competitors include Knight Transportation (KNX), Old Dominion Freight Line (ODFL), and Saia, Inc. (SAIA). These companies are part of the iShares Transportation Average ETF (IYT).