J.B. Hunt eyes intermodal pricing inflection

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JB Hunt intermodal containers on a well car
J.B. Hunt is looking to shake two years of declining intermodal yields. (Photo: Jim Allen/FreightWaves)

J.B. Hunt Transport Services moved a record number of intermodal loads during the third quarter, but service issues and cost headwinds have constrained margins. After two years of declining yields, the company could be nearing an inflection on the pricing front.

Management from the company told investors Tuesday at Stephens annual investment conference in Nashville, Tennessee, that rail service in its Eastern network is excellent. However, it continues to see hiccups on transcontinental lanes given a surge in imports to the West Coast.

Some shippers pulled shipments forward this year to avoid the possibility of a prolonged strike at the East and Gulf Coast ports. While there was only a brief labor disruption to start October, a permanent resolution has yet to be reached. Shippers have also pulled forward freight ahead of a potential shift in trade policy.

During the third quarter, J.B. Hunt’s (NASDAQ: JBHT) transcontinental loads were up 7% year over year and by a double-digit percentage on eastbound lanes out of Southern California. J.B. Hunt’s rail partner in the West, BNSF (NYSE: BRK.B), saw a 19% y/y increase in intermodal container moves during the third quarter and is still seeing midteens increases so far in the fourth quarter.


Container imports at the West Coast’s largest ports peaked in August at almost 1.2 million twenty-foot equivalent units, a more than 25% y/y increase.

By comparison, J.B. Hunt’s Eastern network saw just a 3% y/y increase in loads during the third quarter. In addition to the freight diversions, shorter lengths of haul to destinations in the East make the truckload market, where rates remain relatively depressed, a much more viable alternative.

Chart: (<a href="https://sonar.surf/chart" rel="nofollow noopener" target="_blank" data-ylk="slk:ORAILDOML.USA;elm:context_link;itc:0;sec:content-canvas" class="link ">ORAILDOML.USA</a>). The daily volume of intermodal containers moving in the United States, Canada and Mexico. The index is a 7-day moving average using the date that containers were in-gated at a point of origin. Intermodal trailers (trailer-on-flatcar, or TOFC) are excluded. <em>To learn more about SONAR, <a href="https://sonar.freightwaves.com/sonar-demo-request?utm_source=FreightWaves&utm_medium=Editorial&utm_campaign=SONAR" rel="nofollow noopener" target="_blank" data-ylk="slk:click here;elm:context_link;itc:0;sec:content-canvas" class="link ">click here</a>.</em>
Chart: (ORAILDOML.USA). The daily volume of intermodal containers moving in the United States, Canada and Mexico. The index is a 7-day moving average using the date that containers were in-gated at a point of origin. Intermodal trailers (trailer-on-flatcar, or TOFC) are excluded. To learn more about SONAR, click here.

Rate increases needed to address cost inflation

Darren Field, J.B. Hunt’s intermodal president, said “costs are creeping in” as the company has been shielding customers from the service issues in the West. He said it has been absorbing incremental costs associated with staging loads at off-site yards to prove the service sustainability of intermodal to customers while BNSF catches up to the volume influx.

Field said the problems are not structural in nature and once the railroad gets its head count right, service should improve. He believes that will happen in a couple of months.


BNSF’s total head count was flat sequentially in October, but transportation (train and engine) staff increased 0.4%.

He did caution that current container utilization rates (about 1.7 container turns per month) are likely the new norm and that the industry may not return to pre-pandemic levels of two box turns per month.

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