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J.B. Hunt’s Intermodal Revenues Grew in the Third Quarter

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Intermodal revenues

In the third quarter, J.B. Hunt Transport (JBHT) reported total operating revenues of $2.2 billion—up 20.1% YoY (year-over-year). However, the company narrowly missed analysts’ revenue estimates. J.B. Hunt operates in four segments—Intermodal, Dedicated Contract Services, Integrated Capacity Solutions, and Truck.

The Intermodal segment accounts for more than 50% of J.B. Hunt’s total revenues. In the third quarter, the Intermodal segment’s revenues were $1.22 billion—up 16% compared to $1.05 billion in the third quarter of 2017. The segment’s revenues accounted for 55.5% of J.B. Hunt’s total revenues in the third quarter—down from 57.2% in the third quarter of 2017.

The above chart shows that J.B. Hunt’s Intermodal segment’s revenues have grown steadily YoY in the last few quarters. In the third quarter, the segment’s YoY revenue growth was the highest in the last 15 quarters. The growth explains why the Intermodal segment is important.

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Intermodal revenue growth

The Intermodal segment’s total volumes grew 1% in the third quarter—compared to the same period in 2017. The company’s Eastern network reported 9.5% YoY load growth. However, Transcontinental loads fell 5% YoY during the third quarter due to five major derailments in the company’s national intermodal network. Along with the derailments, Hurricane Florence caused service disruptions, which impacted J.B. Hunt’s ability to handle ~4,000 loads during the quarter.

The revenue growth was driven by 1% YoY volume growth and an ~15% rise in the revenue per load. The higher revenue per load was due to favorable changes in the customer rate, freight mix, and fuel surcharges. Excluding fuel surcharges, the revenues per load rose ~12% compared to the third quarter of 2017. Going forward, J.B. Hunt thinks that the intermodal volumes will be impacted negatively by weather-related events along with lower volumes on the West Coast.

Peers’ intermodal revenues

J.B. Hunt’s Intermodal segment mainly competes with major railroad and trucking (EXI) companies’ intermodal verticals. Marten Transport (MRTN) announced its third-quarter earnings on October 16. The company’s intermodal revenues rose 30.4% YoY to $25.9 million from $19.8 million in the third quarter of 2017. CSX (CSX), a major Eastern US railroad, announced its third-quarter earnings on the same day. CSX reported 12% growth YoY in its intermodal revenues to $500.0 million from $446.0 million.

Among major road transportation companies, truckload services provider Werner Enterprises (WERN) is scheduled to release its third-quarter earnings on October 18. Landstar System (LSTR) is scheduled to report its third-quarter earnings on October 24.

Next, we’ll discuss J.B. Hunt’s Dedicated Contract Services segment.

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