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JB Hunt Transport Services’ operating income fell 30% year-on-year in Q1, the carrier said on Tuesdaywhich could foreshadow other disappointing quarterly earnings reports from the nation’s major trucking companies in the coming days.
The Lowell, Arkansas-based company reported operating income of $194.4 million for the first quarter, up from $277.5 million in the first quarter last year, as a soft freight environment persists. Revenue fell to $2.94 billion, from $3.23 billion a year earlier.
“The highs and lows have been more dramatic than at any other time in my 30-year career,” chairman and incoming CEO Shelley Simpson said in a statement. call analysts Tuesday. “And so, our ability to predict was very difficult.”
The decline in operating income was primarily due to a combination of lower volumes and performance pressure, as well as increases in equipment, insurance and claims and bad debt expenses, JB Hunt said in its earnings release.
The company’s intermodal, dedicated, integrated tonnage and truck divisions saw operating income and revenue decline in the quarter.
Final Mile Services was the only bright spot for JB Hunt in Q1. The business unit’s operating income rose 128% to $15.1 million and its revenue rose 2% to $860 million.
While executives expressed disappointment with the company’s first-quarter results with analysts, the carrier said it remains focused on growing intermodal operations and making investments in people and technology to increase efficiency.
More shipping activity along with better prices would provide a much-needed boost, but predicting when the market will turn has been elusive with shipping demand not following historical patterns, executives said.
Simpson said there is an oversupply of capacity in the market, which is not exiting quickly enough. Providing good service is what will keep customers as the trucking industry waits for the market to change, he said.
JB Hunt is ready for load recovery. Intermodal EVP and President Darren Field said the carrier’s intermodal fleet has 20 percent excess capacity. This was reinforced recently though the company acquisition of Walmart’s intermodal assets;.
The containers acquired from Walmart will be added to the carrier’s fleet gradually throughout the year, although much of that capacity may go unused until demand picks up, Field said. The deal with Walmart includes volume commitments, although Field did not disclose additional details, citing confidentiality agreements with the retailer.
Chief executive John Roberts, who will take over as chairman of the board on July 1, acknowledged the challenges facing the company but expressed confidence in the executive team and looked forward to continuing his more than three decades with the carrier.
“We’ve had a great relationship with you, and it’s been a lot of fun,” Roberts said. “It was a lot more fun than it was. It’s just not much fun right now. so we have to go to work.”