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J.B. Hunt Transport’s ICS Segment’s Revenue Growth

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ICS segment’s revenues

J.B. Hunt Transport Services’ (JBHT) ICS (Integrated Capacity Solutions) segment reported blockbuster growth in the second quarter. The segment’s revenues rose 56.3% in the second quarter. The segment had revenues of $222.0 million in the second quarter of 2017. The ICS segment’s revenues rose to $347.0 million in the second quarter. The ICS segment is non-asset based and the third-largest source of J.B. Hunt’s total revenues.

ICS segment’s share in J.B. Hunt’s total revenues rose 3.4% in the second quarter to 16.2% from 12.9% in the second quarter of 2017.

In the above chart, you can see that the ICS segment’s YoY (year-over-year) revenue growth was the highest in the second quarter in the last 14 quarters. After falling until the second quarter of 2017, the segment’s revenue growth has increased steadily.

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Why did the revenues increase?

The ICS segment’s volumes grew 38% YoY in the second quarter. The segment’s revenue per load increased ~13% due to higher spot volumes and contractual rates this year compared to the second quarter of 2017. J.B. Hunt’s spot volumes rose 63% in the ICS segment, while the contractual volumes grew 28% in the second quarter compared to the second quarter of 2017.

In the second quarter, the ICS segment’s contractual volumes accounted for ~68% of the total load volume and 45% of the total revenue—compared to 73% and 58%, respectively, in the same period last year. Out of the segment’s total revenue, $137.0 million was executed through the marketplace for J.B. Hunt 360—up 42.7% from $96.0 million in the second quarter of 2017.

J.B. Hunt operates in most of the areas in the trucking (ODFL) industry. The company has a liaison with various third-party carriers that have integration capabilities with J.B. Hunt-owned equipment. J.B. Hunt is able to leverage on the third-party carriers’ network, brand, and systems. The leverage gives the ICS segment an edge over its competitors in the US trucking market.

J.B. Hunt faces stiff competition from key non-asset based logistics (XTN) companies like C.H. Robinson Worldwide (CHRW) and Expeditors International of Washington (EXPD) in the ICS segment. C.H. Robinson Worldwide and Expeditors International of Washington are expected to report their earnings on July 31 and August 7, respectively.

Next, we’ll discuss J.B. Hunt’s Truckload segment in the second quarter.

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