Transportation bellwether said it is closely monitoring shifting consumer spending habits
Freight bellwether J.B. Hunt Transport Services Inc. said it is planning for a damped holiday shipping season, as cargo volumes fall ahead of what is typically the busiest period of the year for logistics operators.
The Lowell, Ark.-based truck and rail-transportation company said it is closely watching shifting consumer spending habits amid broader concerns of an economic downturn.
Darren Field, president of intermodal at J.B. Hunt, said on an earnings call Tuesday that peak season volumes aren’t where the company had anticipated they would be.
“Peak season this year just doesn’t appear to be much of an event, I’ll just say it like that, while we’re still experiencing growth,” Mr. Field said.
Strong demand from holiday shoppers usually boosts revenues for carriers in the final quarter, but this year a range of measures of shipping demand are sliding and freight rates are falling as a result. Carriers are pulling back capacity amid broader concerns about an economic downturn.
J.B. Hunt executives said the company is seeing some of that in its freight-brokerage business, where volumes have been softening.
Revenue in its brokerage business was down 11% in the third quarter year-over-year and volume was down 8%.
Overall, the company reported growth in the third quarter. J.B. Hunt logged profit of $269.4 million, up about 5.5% from the second quarter and 35% from a year earlier.
It reported revenue of $3.84 billion, flat compared with the prior quarter and up 22% from a year earlier. Analysts polled by FactSet expected $3.8 billion in revenue.
The company said revenue growth year-over-year was driven by a 17% increase in revenue per load in its intermodal segment, which moves freight by truck and rail, and an 18% increase in average revenue producing trucks in its dedicated contract services segment, which handles outsourced trucking services for shipping customers and includes its last-mile delivery business. It also reported a 13% increase in truckload volume, among other factors.
Mr. Field said intermodal volume was up 4% for the quarter year-over-year. Volume dipped monthly in September, however, though it has so far rebounded in October, he said.
Mr. Field said he attributed the September drop-off to the threat of a national rail strike that month.
The potential strike was averted with a tentative labor agreement that was reached less than 24 hours before a deadline that could have led to a shutdown of rail operations across the U.S. and stranded tens of thousands of shipments.
The threat of a strike resurfaced in October after some rail workers voted down the tentative contract deal. Unions and employers are negotiating a new agreement.
