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J.B. Hunt Transport’s Dedicated Contract Services Segment in 1Q18

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Dedicated Contract Services revenue in 1Q18

J.B. Hunt Transport Services’ (JBHT) Dedicated Contract Services (or DCS) segment is the company’s second-largest revenue source. In 1Q18, the segment’s revenue share was 25%, up 1% from 24% in the same quarter last year.

DCS’s 1Q18 revenue rose a whopping 26% to $494.5 million, from $392 million in the first quarter of 2017.

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Behind the DCS revenue rise

In J.B. Hunt Transport Services’ DCS segment, productivity (expressed in revenue per truck per week) rose 5% in 1Q18 compared with the same quarter last year. Productivity, excluding fuel surcharges, grew 2%, mainly from higher customer rates. The rise was partially offset by reduced productivity and operating velocity (loads per week) due to severe winter weather in the Midwest and Northeast United States.

JBHT has included its Final Mile service in the DCS segment. The service saw a $35 million rise in revenue in 1Q18. The increase included $25 million from the July 2017 acquisition, which was 75% higher than Final Mile revenue in 1Q17.

J.B. Hunt Transport is the largest dedicated service provider in North America. Dedicated trucking helps shippers outsource their transportation functions by allowing shippers to focus on their prime business. It’s usually known as a private fleet conversion.

ETF discussion

J.B. Hunt Transport is tracked by 78 ETFs. Among them, the iShares Transportation Average (IYT) has the highest exposure to the stock at 7.3%. The top holdings of IYT include FedEx (FDX) at 14.6%, Union Pacific (UNP) at 8.3%, and Norfolk Southern (NSC) at 8.2%.

In the next part of this series, we’ll look at JBHT’s Integrated Capacity Solutions segment.

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