Quiver Quantitative - J.B. Hunt Transport Services (JBHT), a major player in the U.S. shipping industry, reported a significant drop in its third-quarter profits, setting off alarms in the freight sector currently grappling with dwindling demand and weakened pricing. The Lowell, Arkansas-based transport giant announced a 30% decline in profits for the quarter ending Sept. 30, recording a profit of $187.4 million ($1.80 per share), in contrast to the previous year's $269.4 million ($2.57 per share). This fell short of the $1.82 per-share earnings predicted by analysts polled by FactSet. The company's revenue also saw a drop of 18%, landing at $3.16 billion, just below the $3.17 billion forecasted.
Two key segments for J.B. Hunt, the intermodal and truckload, experienced severe decreases in revenue per load, despite minor upticks in shipping volumes. Specifically, the intermodal division — J.B. Hunt's most significant business segment, which combines both truck and train transport — witnessed a 41% fall in operating income, amounting to $128 million. Although freight volumes in this segment rose by 1%, the revenue per load, not considering fuel surcharges, plunged by 14% compared to the same time frame last year.
Additionally, J.B. Hunt's freight brokerage integrated capacity solutions sector saw volumes drop by 38%. At the same time, its final mile services segment experienced a 20% reduction in stops. These numbers reflect the broader trend in the trucking industry, where demand has been on the decline. Retailers, responding to an overstock situation in 2022, have cut back on their inventories, leading to reduced orders even during the traditionally bustling pre-holiday season, largely due to diminished consumer demand for goods.
Cass Information Systems, in its Cass Freight Index, highlighted a 20.4% year-over-year drop in freight rates for U.S. domestic trucking and rail networks this past September. Despite this decline, truckload rates did observe a minor 0.5% increase between August and September, hinting at potential stabilization in the sector. Reacting to the results, J.B. Hunt's shares underwent a 4% drop, settling at $188.21 in after-hours trading on Tuesday.
This article was originally published on Quiver Quantitative