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JBHT’s Asset-Light Business: Integrated Capacity Solutions

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Mar. 15 2016, Updated 2:05 a.m. ET

Integrated Capacity Solutions (or ICS)

J.B. Hunt Transport’s (JBHT) Integrated Capacity Solutions segment provides conventional freight brokerage and transportation logistics solutions. JBHT provides these solutions through relationships with numerous third-party carriers and integration with company-owned equipment.

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Segmental financials

The ICS segment is the fastest-growing segment for JBHT. The segment’s revenues grew from $92.0 million in 2007 to a whopping $699.0 million in 2015. The highest jump in the ICS revenues was recorded in 2008 when it rose to $209.0 million, implying a 127% year-over-year rise. This was primarily due to a 150% increase in load volume from new and existing customers.

ICS offers single-source logistics management for customers willing to outsource their transportation functions. JBHT mainly utilizes third-party carriers’ tractor and trailing equipment for the ICS segment. ICS provides non-asset and asset-light transportation solutions to customers through relationships with third-party carriers and also through JBHT-owned equipment. This segment usually does not have long-term contracts with its customers.

JBHT’s segmental competition comes from other non-asset-based logistics companies, freight brokers, and full-load carriers. The company’s major competitors include C.H. Robinson Worldwide (CHRW), Expeditors International of Washington (EXPD), UTI Worldwide (UTIW), Werner Enterprises (WERN), and Landstar System (LSTR). As of December 31, 2015, the ICS segment had a staff of 670 people, representing just 4% of the company’s total manpower.

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ICS services

ICS services include flatbed, refrigerated, less-than-truckload, and multiple dry van and intermodal solutions. Flatbed services are rendered through other carriers and also through company-owned flatbed and curtain side trailers.

In the refrigerated services, JBHT has access to diverse temperature-controlled equipment. It allows the company to offer tailor-made solutions to its customers. For more information on these trucking terminologies, please refer to Part 3.

In the less-than-truckload offerings, the company focuses on carrier procurement, network design and optimization, freight routing, tracking, proof of delivery, bill of lading preparation, carrier payment, reporting, and analysis.

ETF exposure

The SPDR S&P Transportation ETF (XTN) holds 2.73% in JBHT, 2.91% in CHRW, 2.82% in WERN, and 2.7% in LSTR. Among the transportation ETFs, XTN has 26% exposure to trucking companies.

In the next part, we will examine the full truckload, or JBT, segment.

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