Intermodal operator J.B. Hunt’s stock price was boosted by the news that the company had reached a long-term intermodal service agreement with Walmart, with the deal including a sale of the shipper’s intermodal assets to the carrier.
J.B. Hunt subsidiary, J.B. Hunt Transport Inc., will acquire the intermodal containers and chassis owned by Walmart as part of the deal, which will boost the carrier’s dedicated contract services (DCS).
This service agreement has increased both companies’ current volume and capacity commitments allowing them to develop comprehensive intermodal solutions to drive long-term value and efficiencies for both companies.
The prospect of realising those efficiencies had turned a comparatively ordinary fourth quarter of 2023 into a more optimistic Q1 2024. Revenues had dipped to US$884 million for the company’s DCS division, even though its operational income had increased 8% to US$86.1 million compared to Q4 2022.
Truck productivity had declined overall and the number of revenue generating trucks had fallen by 122 vehicles according to the company.
Even so, J.B. Hunt’s share price had increased from US$182/share a year ago to a high US$218.70/share last week, before plummeting to under US$200/share, but as news of the Walmart deal broke the shares recovered to US$211.43 by the close of trading yesterday.
Share prices reflected J.B. Hunt’s improved prospects following the start of its joint intermodal operations with rail operator BNSF in January and that optimism has now led to a new deal with major retailer Walmart.
Spencer Frazier, EVP of sales and marketing at J.B. Hunt, said, “Our customers trust us to develop solutions that scale and drive efficiencies across their ever-changing supply chains.”
Intermodal solutions such as the Quantum deal that J.B. Hunt and BNSF will reduce the carbon footprint of time sensitive by up to 60%, compared to trucking services, using customised solutions to transport freight, with BNSF and J.B. Hunt operators managing the solutions
“Innovative arrangements like this one demonstrate J.B. Hunt’s disciplined approach to strategically allocating capital to advance our mission of driving long-term value for our people, customers and shareholders,” noted Frazier.
In addition to Quantum the new over-the-border intermodal service from Mexico will link US destinations across the US via the Eagle Pass border gateway, with an alternative border crossing point at El Paso, linking the Mexican regions of Monterrey, Silao-Bajio and Pantaco-Mexico City to Chicago.
“Our organisations are committed to growth in Mexico and this joint service offering is a direct reflection of that commitment,” said Katie Farmer, BNSF president and CEO. “By utilising the capacity and expertise of the largest intermodal railroad in the US, the largest railroad in Mexico, and the largest domestic intermodal carrier, this product will seamlessly connect the North American intermodal network.”
J.B. Hunt owns and operates the largest intermodal fleet in North America, with more than 117,000 containers and nearly 7,000 trucks.
The carrier aims to increase its fleet of intermodal containers to 150,000 by 2027 at the latest, acquiring Walmart’s fleet will see the company take a significant step in that direction.
Mary Ann Evans
Correspondent at Large
