J.B. Hunt’s first quarter delivered one of the most promising signs yet that a nearly four-year freight recession may finally be in the rear-view mirror.
The trucking company believes the industry is experiencing a fundamental shift on the supply side of the market as capacity dwindles further and pricing dynamics improve.
“I can tell you things are structurally different,” said Spencer Frazier, executive vice president of sales and marketing at J.B. Hunt, in an earnings call Wednesday. “Capacity is continuing to exit the industry. Customer demand is solid, and therefore, I think we’re in this structural change and the first part of an upcycle.”
Frazier pointed to multiple industry performance indicators as “proof points” of the structural change. Truckload freight rates, the ISM Manufacturing Purchasing Managers’ Index and tender rejections—when a carrier turns down contracted loads in favor of a higher-priced spot freight—have all reached their highest levels since 2022. Concurrently, trucking employment is also at its lowest levels in the same time frame.
J.B. Hunt’s crown jewel, its intermodal segment, set a record for first-quarter volume at 536,852 loads and a single-week volume record in March of over 46,000 loads delivered, “an unusual occurrence in the first quarter when fall peak season is typically when we break volume records,” said the company’s president of intermodal, Darren Field.
The unit generated $1.5 billion in revenue, a shade under half of the company’s total revenue, at a 2 percent growth pace for the quarter. Operating income at the department accelerated 21 percent to $114.5 million.
Frazier pointed to industry performance indicators like truckload freight rates, the ISM Manufacturing Purchasing Managers’ Index and tender rejections all reaching their highest levels since 2022, as “proof points” of the structural change. Concurrently, trucking employment is also at its lowest levels since 2022, Frazier said.
Total first-quarter operating revenue for J.B. Hunt came in at $3.1 billion, up 5 percent year-over-year, with net income jumping 20 percent to $207 million and diluted earnings per share (EPS) surging 27 percent to $1.49.
Operating margins at the freight giant increased 70 basis points, or 0.7 percentage points, to 6.8 percent of revenue in the quarter, even as pricing still did not keep pace with core inflation.
Although J.B. Hunt was reluctant to say pricing had reached in inflection point in January, even after capacity further squeezed from Thanksgiving through the end of the fourth quarter, Frazier said “it feels quite a bit different today than it did” to kick off the year.
“If we wanted to say, ‘Hey, is pricing going to exceed core inflation?’ I would feel pretty confident the answer’s going to be yes,” Frazier remarked.
Recent data from TD Cowen and AFS Logistics reflects the shifting price dynamic. In the first quarter, line haul costs per shipment were up 10.2 percent from the prior three months, leading to a Truckload Rate Per Mile Freight Index of 9 percent above January 2018 base levels.
That index is expected to reach 10.1 percent in the second quarter, marking the first three-month period above 10 percent since 2022.
Frazier described a typical pricing cycle pattern, noting that spot prices move first, before highway contract rates follow suit with a three-to-six-month lag. Finally, intermodal contract rates follow with a six-to-12-month lag. J.B. Hunt’s own revenue per load figures reflect the sequential pattern, he said.
Excluding fuel surcharges, the company’s brokerage division saw revenue per load increase 9 percent year over year, while the truckload unit inched up 3 percent. The intermodal segment decreased 2 percent in the quarter.
Both Frazier and chief operating officer Nick Hobbs flagged ongoing regulatory enforcement as a primary driver of the capacity tightening, which the latter expects is “going to continue for some time.” Hobbs specifically highlighted Indiana’s revocation of nearly 1,800 non-domiciled commercial driver’s licenses (CDLs) from undocumented immigrants earlier this month as part of the Trump administration’s wider crackdown on trucking compliance.
Hobbs described the administration as focused on wanting “CDLs to mean something” and clamping down on unauthorized operators and “chameleon carriers,” the latter of which gained national attention Sunday upon being featured in a segment on 60 Minutes.
Chameleon carriers are trucking companies that illegally reopen under a new name and DOT number after being cited for safety violations or shut down by the Federal Motor Carrier Safety Administration.
