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Why J.B. Hunt’s ICS Revenues Posted Solid Growth in 3Q17

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JBHT’s Integrated Capacity Solutions 3Q17 revenue

J.B. Hunt Transport Services’ (JBHT) Integrated Capacity Solutions segment reported a solid 16% YoY (year-over-year) rise in 3Q17, reaching $269.0 million, compared with $233.0 million in 3Q16. This non-asset-based segment ranks third in terms of contribution to the company’s total revenues.

The segment’s 3Q17 percentage growth was half what it was in 3Q16, but the segment has posted a solid YoY rise in recent quarters.

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Why the sharp rise in ICS revenues?

The ICS segment’s revenue per load jumped 17% YoY in 3Q17, likely due to increased spot market activity, but load volumes fell 1%. The rise in spot market activity resulted in a fine balance between the segment’s contractual and spot revenues.

In the ICS segment, contractual volumes made up ~65% of overall load volumes and 48% of total revenues in 3Q17, compared with 75% and 64%, respectively, in 3Q16.

This segment has an edge over its competitors in the US trucking market. J.B. Hunt has a liaison with numerous third-party carriers that have integration with JBHT-owned equipment, and so the company is able to utilize its third-party carriers’ networks, brands, and systems. Notably, J.B. Hunt provides refrigerated, flatbed, expedited, and LTL (less-than-truckload) services under the ICS segment.

In the integrated capacity solutions space, J.B. Hunt faces stiff competition from major non-asset-based logistics (XLI) companies like Expeditors International of Washington (EXPD), C.H. Robinson Worldwide (CHRW), and Werner Enterprises (WERN).

Next, we’ll assess J.B. Hunt Transport’s Truckload segment in 3Q17.

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