"It's been a lot more fun than it hasn't; it's just not a lot of fun right now."
John Roberts, J.B. Hunt Transport Services' outgoing CEO, didn't get to deliver a peppy farewell speech on the company's April 16 first-quarter earnings conference call. Two years into a corrosive freight downturn, Roberts and his team instead had to relay weak results for Arkansas-based J.B. Hunt in the face of fickle demand, rising costs, and fierce price competition—including from trucking firms taking some of its East Coast intermodal business.
J.B. Hunt, No. 4 on the FleetOwner 500: For-Hire, produced a net profit of $127 million in the first three months of the year, a hefty drop from the $198 million in early 2023. Operating profits, meanwhile, slid to $194 million versus $277 million as revenues fell 9% to $2.94 billion.
"We continue to view the market as out of balance and customers have been and are taking advantage," President (and incoming CEO) Shelley Simpson said on the conference call.
See also: Shelley Simpson named J.B. Hunt's next CEO
Division-level details show how widespread the weak market conditions continue to be. Revenues at its three largest groups—intermodal, dedicated, and brokerage—were down 9%, 2%, and 26%, respectively. Combined, those businesses account for more than 85% of sales.
Revenue per load in J.B. Hunt's intermodal and truckload divisions was down 9% year over year during the first quarter, and that general trend doesn't look like it will reverse soon. Simpson and her colleagues said they've been surprised at the level of price competition during the current bid season.
Those numbers and trends meant that Simpson and other top executives needed to insist—as they have for the past handful of quarters—that the investments and strategic choices they have been making will pay off in the long run. CFO John Kuhlow said recent spending on people, technology, and equipment means J.B. Hunt is carrying $100 million in extra costs on an annual basis versus market demand—a figure he said the company will grow into over time rather than look to cut in the near future.
"If we were focused on the short term, there could be a different play to call here," Kuhlow said. "We're focused on growing into this capacity and holding on to our commitments to our people for the long term."
There were a few bright spots during the quarter for J.B. Hunt: While intermodal volume fell 7% in its Eastern network, business in Southern California grew by double digits. And the company's final-mile unit more than doubled its operating income from early last year to $15.1 million, a figure that also got a boost from a $3.1 million claim settlement.
Shares of J.B. Hunt (Ticker: JBHT) look like they're in for a rough day. They were off more than 7% to about $169 in pre-market trading April 17. That leaves them down about 10% over the past six months, a trend that has trimmed the company's market capitalization to about $18 billion.
