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BNSF Railway’s sale of the brokerage business to long-time business partner JB Hunt Transport Services offers benefits to both carriers, analysts say.
JB Hunt stands to gain additional business through the acquisition while allowing BNSF to focus on its core rail business, Gregory Lafin, managing director of Wipfli Corporate Finance Advisors, told Trucking Dive.
“It’s probably a good move for both parties because they’re familiar with each other … they have a very strong relationship,” said Lafin, who is also co-head of M&A advisory at his firm.
How the deal helps the railroad
Johnathan Phares, assistant professor of supply chain management at Iowa State University, sees no downside to this transaction.
When BNSF branched out into third-party logistics, it chose to operate an additional mode of transportation, which added “complexity to an already complex rail system,” Phares wrote in an email to Trucking Dive.
He said BNSF selling its brokerage business could eliminate any competition that might have existed between the two companies. BNSF’s brokerage provided truckload, flatbed, water carrier, drain, express and LTL services, offerings that complement those available through JB Hunt, including truck and contract services.
Lafin said a weak freight market likely fueled BNSF’s decision to offload its brokerage operations. And the railway has a history of 30 years collaboration with JB Hunt.
In 2022, for example, companies launched an initiative to improvement of intermodal service, which included the railroad providing real estate around key hubs in southern California and Chicago, as well as a commitment to increase its railcar fleet to accommodate more container capacity. In return, JB Hunt added more chassis and predicted that between 7 and 11 million shipments could be converted to intermodal via the digital load panel.
How JB Hunt is profiting from the takeover
The deal underlines JB Hunt’s commitment to intermodal growth.
The goal of the trucking company is to increase its intermodality fleet to 150,000 containers over the next three to five years. So while JB Hunt executives acknowledged that a soft commodity market may force it to slow its growth plans, the brokerage deal provided a competitive opportunity.
Lafin said his review of the relationship revealed that nearly 50 percent of BNSF’s revenue came from its business with JB Hunt, which he noted is the railroad’s largest customer. Now, with the acquisition of the rail brokerage business, JB Hunt has more opportunities to promote additional freight for itself.
“[J.B. Hunt] may be able to add new operations,” Lafin said. “It’s probably a good acquisition on that front, from the other half of the business that JB Hunt is not involved in.”