Dive Brief:
- Facing declining freight demand, J.B. Hunt has identified “rightsizing” opportunities in some areas of the business, said Shelley Simpson during her first earnings call as J.B. Hunt president.
- The company’s Final Mile and Integrated Capacity Solutions units, in particular, are areas of concern.
- “As the market is moving, and [with] our fluid approach, we recognized in some of the areas that we've invested in heavily, there's some rightsizing that we have to do,” Simpson said.
Dive Insight:
J.B. Hunt is reviewing its business segments after maintenance costs crept up amid ongoing equipment supply challenges in Q3, Simpson told investors.
“The amount of trucks that we actually have that we are holding is becoming more and more impactful to our bottom line,” the president said.
The Integrated Capacity Solutions, which provides non-asset-based dry van, flatbed, reefer, expedited and LTL services across the country, experienced an 11% drop in revenue and an 8% drop in overall segment volume YoY in Q3, according to an investor presentation.
Despite higher gross profit, contractual rates and changes in freight mix, the segment’s truckload volumes decreased 1% and revenue per load dropped 4% YoY.
J.B. Hunt is focused on improving the performance of its Final Mile unit amid a backdrop of lower consumer demand.
Zenith Freight Lines, a furniture logistics company that J.B. Hunt acquired in January, contributed $28 million in revenue to the segment for its second straight quarter, according to the investor presentation. But absent Zenith’s revenue contribution, Final Mile revenue increased only 7% YoY in the quarter.
With peak season volumes falling below expectations, J.B. Hunt plans to exercise “an increased level of caution an awareness on broader demand trends and economic activity,” CEO John Roberts told investors.
“Clearly, there are also areas of our business with opportunity for correction,” Roberts said.
