Those looking for some clues about a turn in the freight market will have to ask someone other than J.B. Hunt Transport Services executives and their clients. Uncertainty about the course of the economy continues to weigh on confidence.
"In all of our transactional businesses, the bid compliance from our customers is at an all-time low," CEO John Roberts told analysts April 17 after the No. 4 carrier on the 2023 FleetOwner 500: For-Hire list reported first-quarter earnings that were down nearly 20% from early 2022. "So we have really yet to see or feel the benefit of [sales] wins at this point in time … We don't have really a good crystal ball as to […] when they will recover."
President Shelley Simpson said J.B. Hunt's leadership team is leaning on past experiences with freight cycles "to create more cautiousness" as to when volumes might improve. Clients, she said, remain broadly upbeat about a pickup later this year that would create something resembling a traditional peak season.
"They have a lot of optimism and they want things to improve," Simpson said. "We don't have the data to help support some of that."
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The company's intermodal division, which accounted for 61% of Q1 operating profits, saw first-quarter revenues slip 4% from early last year, with lower import volumes weighing particularly heavy on its results. Transcontinental loads fell 9% year over year and were only slightly offset by a 1% increase in Eastern network loads.
Volumes worsened as the quarter wore on, going from down 2% in January to -4% in February and -8% in March. A change in that trend sits atop Roberts' wish list for the rest of the year.
"We need imports to improve. We need a West Coast labor agreement to finalize and give customers confidence in the West Coast to import programs," Roberts said. "More than anything, we need the goods economy to improve."
Simpson, who last month first pointed out that J.B. Hunt was a little less upbeat than many of its customers about a freight bounce-back, told analysts the downturn in spot prices—data from TCI Business Capital shows van, flatbed and reefer rates are down between 20% and 28% from a year ago—should soon begin to show up meaningfully in terms of firms leaving the market.
"From a capacity perspective, our evaluation of how carriers can perform in this environment makes it very difficult for spot to go significantly lower," she said. "I'm not suggesting we've completely found the bottom, but we have seen a more leveling out."
Despite the decline in Q1 numbers and the uncertain outlook, the J.B. Hunt team isn't making changes to its capital spending plans. CFO John Kuhlow said the company still plans to invest between $1.5 billion and $2 billion in equipment and real estate this year. Properties to set it up for future growth will account for between $400 million and $500 million of that number, with the remainder split evenly between tractors and trailers.
Shares of J.B. Hunt (Ticker: JBHT) were down about 2% to $172.90 in pre-market trading April 18. Over the past six months, they have risen slightly, growing the company's market capitalization to more than $18 billion.
