J B Hunt Transport Services Inc. (JBHT.O)
History
J.B. Hunt is a firm that was created by Johnnie Bryan Hunt an American businessman who had a passion in the logistics market. The company mainly deals with trucking and transportation as its main source of income with broad interest throughout the market. It is centered in the Northwest Arkansas city of Lowell where the company’s head offices are situated. The incorporation of J.B. Hunt was done in the year 1961 starting off with five automobiles and seven refrigerated trucks to be used in the rice hull trade that was booming at that time. The company would then undergo some internal growth such that, by the year 1983, it had become the 80th biggest logistics company in the United States. Its revenues were as high as $63 million. J.B. Hunt Transport operated well over 1,000 trailers, 550 tractors, with employees numbering around 1050.
Currently, J.B. Hunt Transport Services, Inc. has developed to become one of the leading transportation firms in the U.S. with proceeds going past $3 billion in the last quarter. The company mainly operates within the continental U.S: Mexico and Canada with the majority of the operations carried out by big semi-trailer trucks that also offer transportation services. J.B. Hunt Transport currently has over 15,000 employees operating over 11,000 trucks and 46,000 plus trailers and containers within the company's automobiles.
J.B. Hunt Transport faces stiff competition in this line of business especially in the U.S. where it is going against companies such as Swift Transportation, YRC Worldwide, Schneider National, Inc. and Werner Enterprises. J.B. Hunt Transport is currently regarded as a frontrunner in the logistics market both in terms of operation and technology. From the year 1989, J.B. Hunt has been affiliating with railroads to provide intermodal services to its customers. As at today, over 40% of J.B. Hunt Transport’s revenues and 50% of its earnings are gained from intermodal. They also came up with a specified trucking service partition together with a flatbed action, but it was sold after some time.
Types of Services offered by J.B. Hunt Transport
Dedicated Contract Services (DCS): Began in the year 1992. These operations usually offer personalized services which can be administered by long-standing deals. They include flatbed, local inner-city jobs, dump trailers, dry-van and temperature-controlled operations.
Intermodal Services (JBI): This segment started its functions in the year 1989 forming a conglomerate with BNSF Railway Company (formerly Santa Fe Railway). JBI operates on intermodal facilities of rail transporters for the basic line haul undertaking of its materials. It executes the deliveries and pickups ("drayage") for clients between points of collection to the destination points. JBI can also offer the drayage service from points of collection to destination points by the use of tractors belonging to the company or those acquired from its partners.
Integrated Capacity Solutions (ICS): ICS comprises full truckload, dry-van freight by means of tractors controlled by the company moving over highways and roads. This segment comprises a set of special transport services such as the LTL, Flatbed and Refrigerated. This segment posted record revenue in excess of $535 million in the last financial year (2013).
Financial Overview
J.B. Hunt Transport Services, Inc. posted total revenue of $5.584 billion, an increase of 10.4% in the financial year 2013. The company’s operating income for the last quarter 2013 increased to $153.5 million compared to the $143.3 million for the third quarter 2013. The company also posted net earnings of $2.87 cents per share totaling $342.3 million. This is an increase of 10.8% and 10.3% respectively compared to the fiscal year 2012. The increase mainly projects higher returns on bigger load capacities and better system balance within the JBI. These developments were mainly due to the higher costs paid to employ and maintain drivers; increased workers’ reward and accident expenditures; higher payments to third party carriers, fewer gains on equipment sales and lower truck operation. However, the company’s tradition of allotting capital to services demanded by clients continues to give sustainable results. The company also gives priority to return on capital to its shareholders.
Transformation of J.B. Hunt Transport
JB Hunt has undergone several transformation periods over the years since its establishment. The company has been able to move from the traditional truckload carriage upon which it was founded to the current intermodal and "dedicated" services that are being offered. This transformation has been of huge benefit to the company as earnings have greatly increased since the company started applying this strategy. For example, a study into J.B. Hunt’s earnings in the last 10 years shows how successful this strategy has been.
Between the year 2002 and 2012, business from straight truckload carriage has reduced from 36% of the business to just 10% in 2012. On the other side, business from intermodal has increased from 36% in 2002 to over 60% in 2012. Looking keenly, straight truckload revenue reduced from $827 million in 2002 to just $488 million in 2012. This is contrary to the earnings from intermodal that has increased from $809 million in 2002 to over $3 billion in 2012. Earnings from dedicated also increased from $628 million in 2002 to more than $1 billion in 2012.
The intermodal strategy by JB Hunt has been of great benefit to the company as it is one of the reasons why the company is still in business. It has also grown to be one of the strong points of the company against most of its competitors in the U.S. market. The success of intermodal can also be seen in the amount of profits that this company has been able to post over the last few years. Straight truckload business profits were over 26% in 2002, but this has fallen to just 3% in 2012. Intermodal profits, on the other hand, have greatly increased with the company reaping over 70% of its profits now from this strategy. This strategy has been very successful at J.B. Hunt, and this can be proven by the continual increases in sales as was witnessed in the last quarter of 2013 when JB Hunt posted over 20.8% profit rise and a revenue gain of 11.7%. This strategy is now being used by other notable competitors such as Swift and Werner. These two company’s earnings have also increased in the last couple of years as a result of this strategy.
Sustainability
According to the (EPA) Environmental Protection Agency, sustainability refers to “the ability to achieve continuing economic prosperity while protecting the natural systems of the planet and providing a high quality of life for its people.” The company J.B. Hunt has had a rich tradition of innovating new, creative means to move its goods in a safe, low-cost and sustainable way. J.B. Hunt Transport has grown as a forerunner in the area of minimizing both transportation costs and its effects on the society and environment.
J.B. Hunt Results
The implementation of sustainability efforts by JB Hunt has led to several positive results to our environment. There is reduced yearly greenhouse gas releases by over 1,000,000 tons, Earned recognition as an EPA SmartWaySM Transport Partner, empty mile reductions, idle management, Sale of carbon offsets, Intermodal conversions, Generated new revenue streams among others.
Key Trends and Forces
Competition
The trucking and transport market in the U.S. is very competitive with several companies both regional and international. This industry is highly divided mainly because there are low barriers to entry into the market. Currently, there are over 360,000 trucking companies within the U.S. The main form of competition between these companies is based on transit times, freight prices, reliability, service and scope of operations.
Government Regulations
There are set rules that must be followed by all players in this industry. J.B. Hunt follows these rules and regulations by the government set by the US Department of Transportation and Homeland Security and EPA).
Sensitivity to Economic Conditions
The performance of this industry is closely linked to U.S. economic cycles. The market is vulnerable to variations in the manufacturing and retail sectors. This relationship between economic growth and trucking profits is due to basic supply and demand economics, since customers typically use a bidding system, which tends to keep prices fairly competitive; when shipping volume decreases in a weakening economy with supply held constant, then prices usually decrease.
Reliance on Third-Party Transporters
J.B. Hunt has over the years been dependent on third party transporters such as Norfolk Southern (NSC) and Burlington Northern Santa Fe (BNI). These two companies in particular have been able to assist J.B. Hunt in moving goods in its intermodal segment. Any form of disruptions to any of these partners would bring serious business consequences to JB Hunt.
Fuel Expenses
J.B. Hunt, together with other well-established firms in the trucking businesses are quite protected from changes in fuel prices. This is because of a well-known fuel surcharge system that allows customers to pay conventional shipping rates plus or minus the change in the prices of fuels. However, it is becoming apparent that any further increases in fuel prices will make it harder for the industry to go on with the practice of transferring these charges to the clients.
Transportation of Goods
The company J.B. Hunt is directly competing with well-established trucking companies such as Old Dominion Freight Line (ODFL), YRC Worldwide (YRCW), and Conway Inc. (CNW). It is also involved in competition with railroad and air freight companies though indirectly.
Recent News/Controversies in J.B. Hunt Transport Services Inc
There has not been negative news regarding JB Hunt in the recent past. However, JB Hunt has been making some changes especially in the top management recently. The company made some leadership changes in the Truck, Business Unit, JBT departments in 2013. The company also made headlines when they paid the CEO Jason Roberts over $4Million in 2013.
Job Description: Career Sales Coordinator
This position requires one to aggressively market the J.B. Hunt brand in order to create and grow strong business relations with third party carriers. One must also make sure that all reserved freight is covered with the use of internal assets and partner carriers. He/she should also manage the safe and cost efficient delivery of our clients' goods. Any enthusiastic individual eager to be part of the cutting edge of third party logistics with great aspirations for excellence is encouraged to apply.
Responsibilities
- Ensuring client's goods are picked up and transported to the right destination by the use of safe, consistent carriers.
- Developing and managing the system of third party carriers and ensuring enough capacity for their tasks.
- Negotiating with carriers to fulfil their duties ensuring cost-effectiveness.
- Ensuring client contentment and satisfactory service points where goods are picked up and delivered by the use of safe, dependable transporters.
- Should be able to meet or exceed the margin and revenue objectives.
Qualifications:
- Must have 2-4 year degree or at least 12 months equivalent office experience and/or training.
- Must be willing to be on call 24 hours a day
- Must be able to deal efficiently and delicately with clients and co-workers and make resolutions in a well-timed, proficient manner.
- Exceptional analytical talents with the capability to manage numerous assignments with a sense of urgency.
Bibliography
David Cullen | Fleet Owner, Jan 28, 2011 “JB Hunt: Results prove strategy works.” Retrieved from http://fleetowner.com/management/news/jb-hunt-results-strategy-works-0128 (Accessed on Mar 27th 2014)
Jan Cottingham. “Roberts enjoying smooth ride at JB Hunt.” NWA BUSINESS JOURNAL.COM. Retrieved from http://www.nwabusinessjournal.com/11583/roberts-enjoying-smooth-ride-at-jb-hunt (Accessed on Mar 27th 2014)
J.B. Hunt official website http://www.jbhunt.com/jobs (Accessed on Mar 27th 2014)
“J. B. Hunt, 79; Truck Driver Built Transportation Empire.” Washington Post, December 9, 2006, p. B07. Retrieved from http://www.washingtonpost.com/wpdyn/content/article/2006/12/08/AR2006120801566.html (Accessed on Mar 27th 2014)
Patton, Oliver B. “J. B. Hunt.” Heavy Duty Trucking: The Business Magazine of Trucking, January 2005, pp. 96–99. Online at http://www.heavydutytrucking.com/2005/01/096a0501.asp (Accessed on Mar 27th 2014)
Schwartz, Marvin. J. B. Hunt: The Long Haul to Success. Fayetteville: University of Arkansas Press, 1992.
Supply Chain Digest- Supply Chain News Bites - Feb. 21, 2013 – Retrieved from http://www.scdigest.com/assets/newsviews/13-02-22-1.php?cid=6761 (Accessed on Mar 27th 2014)
Kim Souza. “J.B. Hunt tallies another record year but shares slide” The City Wire.com Thu, 01/23/2014. Retrieved from http://www.thecitywire.com/node/31418#.UzUi7c75FS4. (Accessed on Mar 27th 2014)
