JB Hunt at Bank of America Conference: Navigating Market Volatility

On Tuesday, 13 May 2025, JB Hunt Transport Services Inc (NASDAQ:JBHT) presented at the Bank of America Industrials, Transportation & Airlines Key Leaders Conference 2025. The discussion, led by key executives, highlighted the company’s strategic agility amid market volatility, emphasizing both challenges and growth opportunities. Despite facing pricing pressures and increased competition, JB Hunt is committed to operational excellence and long-term growth.

Key Takeaways

• JB Hunt reported a 1% decline in revenue but achieved an 8% growth in intermodal volumes.
• The company is focused on cost management and improving safety to reduce insurance expenses.
• JB Hunt is leveraging intermodal transport to help customers lower transportation costs.
• Strategic adjustments are underway in their digital marketplace to enhance security and efficiency.
• JB Hunt remains committed to expanding its dedicated fleet and enhancing customer experience.

Financial Results

• Revenue decreased by 1%, with an 8% drop in operating income.
• Insurance and claims expenses increased to 3.3% of revenue, prompting a focus on safety improvements.
• The company experienced sequential declines in revenue per load, influenced by fuel surcharges and regional mix.

Operational Updates

• JB Hunt is prioritizing cost management strategies and operational excellence to maintain margins.
• The company is optimizing its intermodal network to balance lanes and improve pricing strategies.
• Improvements in rail service have bolstered customer confidence, particularly in the Eastern network.

Future Outlook

• JB Hunt is targeting a net fleet growth of 800 to 1,000 trucks this year.
• The company is prepared for potential disruptions in international trade dynamics, with a significant portion of business originating from the West Coast.
• Digital marketplace improvements focus on carrier credential validation and fraud detection.

Q&A Highlights

• Executives emphasized the importance of agility and cost control in responding to market changes.
• Customers are increasingly shifting from highway to intermodal transport to reduce costs.
• The leadership team is confident in maintaining high customer retention through operational excellence.

For a detailed understanding of JB Hunt’s strategies and market insights, please refer to the full transcript below.

Full transcript - Bank of America Industrials, Transportation & Airlines Key Leaders Conference 2025:

Ken Hoexter, Analyst, BofA: Good morning, everybody. Welcome again to our our thirty second annual Industrials Transportation Airlines Key Leaders Conference. I’m Ken Hoexter, BofA’s air freight and surface transportation and and marine shipping analyst. Next up, we we welcome JB Hunt. We welcome Spencer Fraser, EVP of sales and marketing, Stacy Griffin, SVP of intermodal, and and Brad Delco, SVP of finance and and IR from JB Hunt Transport Services.

We welcome Spencer and Stacy each for their first time to our conference, mister Delco’s fifth time, so you are halfway to the 10 timer award. Think you might get a nice jacket, bottle wine. Who knows? Green jacket. Green jacket.

Definitely not. Definitely not. Unless you’re hosting. And this is JB Hunt’s seventeenth time attending our conference in the twenty four years we’ve hosted. So glad to have you with us here, and and thank you for your continued support.

So, Spencer or Stacy, I’ll I’ll throw it open to the two of you. Let me open it up to you for your initial thoughts on the state of the market. I mean, so much has happened not just, you know, year to date, but in the last weekend, a couple days. What what three key things would you like us to to take away from today? Yeah.

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: Well, Ken, I’ll start. Thanks for having us here. I’m glad to be on stage with you and just also talk about what’s going on. It has been a pretty exciting year so far and definitely things have played out. Some of them the way we thought they would and others not so much, but I’d say three things that would be important for this group to know.

When I lead our commercial strategy and talk to our customers, they’re looking right now in this period of change and kind of volatility is just to make sure that they’re working with people that have agility to serve their needs as things continue to develop. And we do believe there are some things changing and we can get to that later based on the announcements from Sunday night. So that really kind of plays well into JB Hunt’s business model and really across all of our services, how we can take care of them. The other thing, so number two is really around cost. Our industry continues to experience an inflationary cost environment, and has for three years been in a deflationary rate environment.

And that puts pressure on all of us. Specifically to J. B. Hunt, we’re focused on lowering our cost to serve, while improving our margins. And that’s something that we all have to do for the health of our company and the industry.

And then third, stay on cost for a minute. Our customers also are looking for productivity. They’re looking for ways to reduce their expenses. And that’s where we have to come up with new ways to serve them and help them beat their budgets and make sure that our value proposition stands out to where we can do that and drive the margins that we need. So agility, cost, cost.

Stacy, you got anything you want to add to that?

Stacy Griffin, SVP of Intermodal, JB Hunt: I think I’ll add on to the cost of the cost because that is a prevailing problem for our industry. But for our customers, when they’re looking for ways to control cost and to lower their transportation cost, a shift from highway to intermodal is a shortcut to achieve some cost reductions in whatever market we’re in. And so we are seeing our customers lean into that, trying to control where they’re at today and get ahead of where they know the market is going from a highway side.

Ken Hoexter, Analyst, BofA: So Stacy, let’s focus on load growth on the intermodal, right? So it was you were kind of adamant or at least Brad was in telling us that the load growth in the quarter was not led by pre shipping based on your customer conversations. Given that backdrop and the data we see, we seeing given the air pocket that’s hitting right now, do you still feel like that wasn’t pre shipping? Was it pre shipping? Are we going to see a big catch up phase now that we’ve got this settlement in a few weeks?

Stacy Griffin, SVP of Intermodal, JB Hunt: So I think this will be a two parter, and I’ll take the first part. I’m gonna let Spencer take the second part. When you look at our first quarter results and our double digit growth in the East, that’s not pull forward.

Ken Hoexter, Analyst, BofA: Yep.

Stacy Griffin, SVP of Intermodal, JB Hunt: That double digit growth in the East is, largely supported by the underlying service that both J. B. Hunt and with our rail providers that we’re providing to our customers and that opportunity that shippers are embracing to convert from highway into intermodal. I think our growth in the East kind of contradicts a bit the pull forward concept. And but then what does that look like and that air pocket?

I’ll let Spencer speak to that.

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: Yeah. And I’ll I’ll also go back to every customer is unique. Every supply chain is unique. And every customer in this period of the last sixty days has been managing their business and supply chain at a SKU level. Looking at should they pause?

Should they bring things forward, put it in a bonded warehouse? Should they change country of origin sourcing? And they’ve been running plays like that over the last few weeks. And so when you think about is there going to be an air pocket? I also wanna make sure and really disconnect the timing of the international supply chain and freight flows versus the domestic supply chain and timing that customers use to meet demand.

And those two things are distinctly different. And a lot of business comes in at different times. It goes into storage. Sometimes it might cross dock in the day or transload in the day, but a lot of it goes into storage that gives them the agility to meet demand at different locations at different times. So is there an air pocket from an ocean freight perspective?

Obviously, you can see the data and probably suggest that’s going to happen. Will that take place today over the next six weeks? Likely. But are there going to be different waves of freight? There are a lot of customers that ran plays and put things into bonded warehouses.

As of 12:01 tomorrow morning, that can change and that can start to move and create a wave of demand. How big that will be? I don’t know. Is there business that customers with some of their SKUs paused the button on production as well as shipping and inventory has stacked up in China? Yes.

Is that moving today? Likely. When will that hit? Six to eight weeks later? Maybe that’s wave two.

And then really the third wave, I think is the one that we’re most normally associated with and consider associated with fall peak retail season. And I would anticipate that to happen too. So all of our customers are running different plays, have been doing that at the SKU level. The change Sunday night allowed them to think differently, and I think could possibly see that pocket on the oceanfront, but maybe close some of that gap in

Brad Delco, SVP of Finance and IR, JB Hunt: the next few weeks domestically. Spencer, let’s just kind of

Ken Hoexter, Analyst, BofA: put that answer, right? So what are you hearing from customers now on their outlook, right? So when I look at our truck shipper survey, right, it hit low levels into the forties we hadn’t seen for years, right? In terms of their confidence level, their outlooks, Yet here we are, things have changed. Right?

The world has changed. Have you had recent catch up conversations in the last day or two and Yeah. Yeah. We last twenty minutes.

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: Yeah. We are talking to them frequently. And I guess one thing that was a little bit more of a concern for me above the tariff issue was some macro challenges to demand. But I’ll say consistently, really from March 1, that deadline to April 1 through today, our customers have talked about the health of the consumer and actually being engaged. And I think that’s a function of employment.

And really, maybe that psychological impact of the tariff and the headlines didn’t trickle down into the consumer. So we would say that the customer is still engaged also across industries. So my macro concern has kind of drifted away. Now, does that mean that there’s a demand catalyst staring us in the face to drive incremental consumer demand? I’m not saying that, but I think things are at a steady state at the moment.

And how that kind of translates into domestic volumes from here, we’ll have to see.

Ken Hoexter, Analyst, BofA: So just to clarify that, you’re saying that the customer not is better than not fading, it’s showing some strength?

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: Yeah. Think it’s steady. Steady. Yeah. Steady state.

Yeah.

Ken Hoexter, Analyst, BofA: Okay. Alright. Stacy, intermodal loads up up 8% in the first quarter off of, I guess, easy flat comp. The intermodal and rail seem to be willing winning some share despite spot rates that are sub cost for truckers. So you talked about the cost benefit, good service for the railroads winning.

How do you win in that backdrop when when trucking is at at, like, at these levels?

Stacy Griffin, SVP of Intermodal, JB Hunt: We win because we are going to the our customers from a position of strength with our operational excellence. We are we have a strong value proposition to our customers inside of Intermodal, but inside of all of J. V. Hunt in terms of being able to solve for them, in in a mode agnostic way, and that is helping them convert. You know, we have a highway lab, but we’re helping them convert freight from over the road to intermodal where that best fits their what they’re looking for from a balance of cost, transit, capacity.

And that’s powerful for us to do that. The underlying rail service across all of our rail providers is better today than it has been in certainly like the COVID area where it was it was not good. It was not supportive of what our customers need, and we’ve got a long run of really good service, which is bringing confidence back to our customers. So that’s powerful. And we talked about in the East where we grew, close to 13%.

Normally, growth in the East is fueled by high truck rates and high fuel. Those things didn’t exist in q one. Yeah. And we still have strong growth. Our our customers are planning for a different day in a different cost structure, and the service supports it.

Ken Hoexter, Analyst, BofA: So I wanna I wanna dig into the share gains. Right? Just because something throws me off. It used to be I’d I’d take Burlington’s carload intermodal carloads and and Norfolk, put them together, you’d add like a couple five, six hundred basis points, you’d get JPN’s growth levels. Right?

It was now I know they’re they have a mix of international versus domestic and and obviously being domestic moves. But if I I just think about the math of of what they’re putting out. Right? So be Burlington’s carloads were up 9% in the first quarter against a mid teens growth a year ago, so tough comps. Norfolk was up a smaller three and a half percent, yet your Eastern traffic was up 13%.

So how do I and and I mean, you’re a major participant on their network. So what what are you is it just share wins? Is it we’re not seeing that in the domestic international mix with the railroads. What is what is the difference particularly One

Stacy Griffin, SVP of Intermodal, JB Hunt: thing I want to point out across all, and it’s actually more relevant to the NSF, is the railroads count the moves of empties. We don’t count those. So when we talk about our growth, we’re not counting our empty moves, the railroads do. And it is a mix of their freight. The things outside of what we call intermodal.

Here’s the other key. Inside of our network, we separate between TransCon and Eastern network. Our Mexico business is in our Eastern network numbers, and we’re growing out of Mexico. And so if we’re going from Mexico City to Chicago, that’s not touching the NS, and that’s part of our Eastern network growth.

Ken Hoexter, Analyst, BofA: Got it. It. I’d

Brad Delco, SVP of Finance and IR, JB Hunt: say too, Ken, I mean, that that relationship has probably broken down over time too. Mean Definitely. Stacy did a good job of calling out, you know, Mexico is in our Eastern network. Movement of empties, railroads get paid to move empties. We don’t get paid to move empties.

It’s a cost for us. They also have parcel. They also have LTL. They also have international. And I think there’s been some publicly known shifts of international freight moving between carriers, and I think that throws some of those numbers off in terms of trying to

Ken Hoexter, Analyst, BofA: correlate that with our broken it in in terms of what it used to be. It used to be an easier look to see, you know, from weekly numbers to see how JBL works.

Brad Delco, SVP of Finance and IR, JB Hunt: And I would also say too, when you think about the diversification of our network, I mean, use both railroads in the East, CSX, North for Southern, we’ve been very complimentary of the service we’ve had for quite some time, utilize BNSF in the West. We’re using both Feromex and CPKC in and out of Mexico. And we have had a long relationship with CN.

Ken Hoexter, Analyst, BofA: So we have a breadth and depth in terms of the rail providers we’re utilizing to provide service to customers too. So Stacy, Darren recently mentioned the old 1.8 to two turns per box per month might not be relevant going forward. Just want to understand why can you not get back there? Is it just because you have so many boxes in storage that you can use, or is there something about your network and and utilization that that changes that dynamic?

Stacy Griffin, SVP of Intermodal, JB Hunt: I would say the the key thing is PSR. So when the robots implemented PSR a few years ago, it slowed down the movement and that basically took turns away from us.

Ken Hoexter, Analyst, BofA: Because they’re running the trains on the schedule as opposed to just leaving when the yards are full. Okay.

Stacy Griffin, SVP of Intermodal, JB Hunt: Just They’re adding transit time. Transit time. They’ve added time to the schedules to produce a more consistent solution.

Ken Hoexter, Analyst, BofA: Okay.

Stacy Griffin, SVP of Intermodal, JB Hunt: Which is powerful. Speed is important. Consistency is a lot more important for most of our customers because that allows better planning.

Ken Hoexter, Analyst, BofA: But better planning, better execution, better customer service, does that structurally fundamentally change the ROI on a per box purchase for you?

Stacy Griffin, SVP of Intermodal, JB Hunt: I’m going let Brad answer ROI questions.

Brad Delco, SVP of Finance and IR, JB Hunt: Well, would let Stacy answer that question and say when we think about how we price the customers, we’re thinking about we have an asset, we need that asset to generate a certain amount of revenue to generate a certain amount of notepad to make sure we’re getting the appropriate return. And so we would ultimately see that reflected in how we price and how the industry has to price intermodal. So I don’t know that our outlook on margins have changed. I don’t think our outlook on what sort of returns we think are appropriate for us in the industry given our scale and given some of the advantages we have. So I think all of that gets worked into how we price our network to make sure we’re generating the right returns.

Okay.

Ken Hoexter, Analyst, BofA: Me stick one more on Stacy. The revenue per load was down sequentially in the first quarter. How do we decipher fuel surcharge versus mixed impact of more East versus West? I guess, is there any way you can guide us thoughts on core pricing? And if that mix impact of of just continuing to grow in the East continues going forward?

Stacy Griffin, SVP of Intermodal, JB Hunt: Well, you used the word guide. That’s a watch out for me. I used word guide. You did.

Ken Hoexter, Analyst, BofA: Guidance. Guidance.

Stacy Griffin, SVP of Intermodal, JB Hunt: So close. Right?

Ken Hoexter, Analyst, BofA: Process.

Stacy Griffin, SVP of Intermodal, JB Hunt: So we shared in our earnings release that revenue is down two, but x fuel one, if I got that right. And so fuel is absolutely part of that impact. And with our growth inside of the Eastern network, you know, Eastern network loads are shorter length haul, lower revenue per load, and that’s going to have an impact. We have shared the we’re also we set out very transparently. We set out inside of this bid season, really not unlike any other, but to focus on repairing our margin.

Easiest path to that is with price, right, to improve our network balance. And so that’s impacting that shows up in mix as well and growth overall. We are having marginal success in our headholes of improving price. We are having success in improving our network balance. And so you think about it, a revenue per load to go from Chicago to LA is very different from LA to Chicago, and that shows up in that mix as well.

Ken Hoexter, Analyst, BofA: Mhmm. Yeah. Certainly. Darren mentioned margins needed repair, but but only modest success in repairing rates while retaining business. So is that commentary indicating that it’s hard to retain your own business?

Is that why you highlighted lost existing business? Maybe thoughts, maybe just a little clarification or understanding of that.

Brad Delco, SVP of Finance and IR, JB Hunt: I’ll I’ll take that because

Stacy Griffin, SVP of Intermodal, JB Hunt: You’re afraid of what I might say?

Brad Delco, SVP of Finance and IR, JB Hunt: No. By the way, this is Stacy’s first conference, and we’re really glad she’s here because she does price about one third of all domestic intermodal volumes. And so I thought it was really important for her to share her perspective on the market and what we’re seeing. We made that comment on our earnings call, hey, really to articulate the point that Stacy just made, this is our strategy. We want to get as much rate as we can.

Number two, we really need to focus on getting better lane balance. That drives out a cost for us while providing us opportunities to generate revenue to reposition our box into a head haul lane to generate, obviously a healthier rate in that head haul lane. And then three is to grow the business. And we wanted to make sure we articulated to our investors to say, hey, we’re being very disciplined in that strategy in terms of trying to grow and to prove that we are being cost disciplined. The example that I’ve shared is Darren Field, you use different terminology than me, but Darren Field walks into Stacy’s office and says, you have to prove to me that you’re really testing the limits on where rates can and will go and what is acceptable in the market.

We’re in a competitive business. We have to price to the market and to our value proposition. And the way that Stacy proves that, she says she lines up carcasses, which means you haven’t pushed rates hard enough until you lose some business. And I think we just wanted to articulate to the market. Stacy has been working very hard to push the market and she’s proven that by losing some business.

That just I think hopefully should be good indication to the audience and the investors that where we are really trying hard to push the market and make sure we’re getting the right value for what services we’re providing.

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: Yeah. And Ken, I got to add something here. You know, and I appreciate that perspective, But also you talk about retention. Stacy mentioned our focus and one of our number one priorities for the organization is operational excellence. That creates a unique value proposition that we do have to make sure that we get the right price in return to deliver.

But from a retention perspective, our retention and customer count in volume and revenue is the highest it’s ever been across all of our business segments. That would not have taken place without that number one priority and the focus on operational excellence. So that while we are going to continue to push our value proposition, that operational excellence really is what’s going to drive that.

Ken Hoexter, Analyst, BofA: So, Spencer, let’s let’s follow-up on that because Darren noted success in early bid season. Are there any updates now that we’re mostly done through the bid season in terms of change of rate levels through the process? I mean, I I I can’t imagine how you position that for when things can change so wildly like we saw over the weekend, and yet you’re thinking about the whole year ahead rather than each week to week. So did you see smaller bids, postponing a bids, normal course action?

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: Yeah. So I’ll say from a customer perspective in the bid season that really goes from Q3 through Q2, we’ve seen the normal course of action as you may have mentioned from a timing perspective. And then as things kind of progress that we anticipate there to be smaller mini bids if there is some chaos or dislocation in the market, but I’d say things have planned and executed on a normal cadence with our customers. I don’t know if you have any comments on that.

Stacy Griffin, SVP of Intermodal, JB Hunt: No. It’s it’s been fairly normal. And that’s that’s one of the I think frustrating for some people is that there’s so it’s been so much noise and so chaotic these last few months, but that hasn’t really entirely translated into how our customers are going about executing their businesses, particularly inside of their transportation planning.

Ken Hoexter, Analyst, BofA: So when you when you talk about what the carcass is walking away from some businesses, who’s who’s been is there anybody being aggressive in winning that? Is that going to truck? Is it other IMCs? Is it where’s the business that we we should look to?

Stacy Griffin, SVP of Intermodal, JB Hunt: It’s I’d say it’s less truck supported by the intermodal service. So we’re seeing less of the the truck. It is other IMCs. It is other competitors. But it’s no different this year than every year.

I mean, we participate in a competitive bid season every single year.

Ken Hoexter, Analyst, BofA: Yeah.

Stacy Griffin, SVP of Intermodal, JB Hunt: We’re we’re bringing our value proposition to our customers as our competitors. I do scratch my head sometimes because of where margins are for the industry that we’re not seeing faster movement.

Ken Hoexter, Analyst, BofA: Faster movement of Recovery.

Stacy Griffin, SVP of Intermodal, JB Hunt: Margin repair.

Ken Hoexter, Analyst, BofA: Okay. Because some are willing to run on thinner margins for longer than you would have thought or that they’re staying in business for I think it’s

Brad Delco, SVP of Finance and IR, JB Hunt: a way of saying when you look at our performance, we’ve had industry leading volume growth at industry leading margins. And it is surprising to see where some of the margins are in our industry and they’re not being more disciplined. Yeah. Okay. So let’s talk

Ken Hoexter, Analyst, BofA: about that. Right? So I guess maybe a QLO question overall, but happy to hear your answer, which would be, you you posted a 1% decline in revenues in the first quarter, ’8 percent decline in operating income. So would that is that a timing, a weather issue or cost a lot more fixed than you would have thought? How would you kind of step back and think about that?

Brad Delco, SVP of Finance and IR, JB Hunt: Well, I mean, I think maybe you’ve heard Spencer talk about it. You’ve heard us talk about it. The industry has been in an environment where we’ve seen deflationary pressure on price and inflationary pressure on cost. Keep in mind that the down 1% revenue for our company included plus 8% volume growth in intermodal. So we came off of an all time record volume quarter in Q3, beating that in Q4, obviously first quarter seasonality, we’re not going to beat a fourth quarter, but still the strongest first quarter intermodal volume.

So we have done a good job of continuing to grow in a difficult environment to help us leverage some of our fixed costs. But you could look at the P and L, I think we’ve done a really good job of managing costs that are really within our control. One of the difficult and frustrating ones, and I don’t love speaking to it, but is insurance and claims. You go back three or four years ago, it was 1.5% of our revenue in terms of a cost line item. And in the first quarter it was 3.3%.

So we’ve lost 180 basis points on the insurance and claims line that’s really made up of call it insurance premiums and our experience and how claims develop and settle. That’s an industry problem. That’s something that will need to be recovered through a rate cycle. And I think there’s two ways companies can approach how to deal with that. They can double down or triple down and focus on safety.

And you’ve heard us and Nick Hobbs talk about what we’ve done with our safety performance. 2023 was a record year for us in terms of DOT preventable accidents per million miles. We improved upon that in 2024. And then in our last earnings call, we said that our first quarter of twenty five was better than ’24. And the first quarter is always the most difficult year, sorry, the most difficult quarter to execute on a safety performance certainly compared to a full prior year.

That to me is a very J. B. Hunt way of attacking a problem with long term focus. The other way we could attack that is really just allow our shareholders or owners to take on more of that risk by reducing their coverage. And we haven’t taken that approach.

To your question about, yeah, we still have inflationary cost pressures. We’re addressing those. We’re driving a lot of productivity efficiency within our operations, but there’s still some inflationary costs that we really do need a rate cycle to help us address.

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: Yeah, and just quickly, I want to add, there’s a couple things we are focused on making sure that we price our business in a way that can get the return based on the value we create for customers. But also we’re not done on the cost front, we’re never done. The safety is a great example, but we are extremely focused on lowering our cost to serve. Yeah. And doing that not just short term, but structurally over the long term and really looking at every aspect of our business, what’s necessary to serve our customers at a high level and what’s not, and if it’s not, then what can we do to get rid of that cost?

So wanna make sure that’s an area of focus for our executive team that we’re working on every single day that doesn’t go away. Yeah. Yeah.

Ken Hoexter, Analyst, BofA: Alright. Question for for for either Stacy or or Spencer. Must assured that not Brad. But historically, we’ve seen a flattish intermodal operating ratio between the first quarter and second quarter and and a 50 basis point improvement for the overall company. I know you don’t forecast, but is there anything that stands out in terms of seasonality or expenses that we should recognize that could impact the relative performance?

Stacy, just say no.

Stacy Griffin, SVP of Intermodal, JB Hunt: Yeah. I’m not answering that question.

Brad Delco, SVP of Finance and IR, JB Hunt: No. I mean, Ken, I think the biggest unknown is are we gonna see an air pocket or not? And I think that I’m glad Stacy said it, but just to reiterate it, there’s been a lot of volatility on the news, a lot of different headlines. And if you didn’t look at a TV or if you didn’t look at tickers going across and just looked at what was happening in transportation, I think you would see it’s been a little bit more business as usual relative to the volatility on the screens. Yeah.

Then I’ll just say again,

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: on our earnings call, I talked about our customers at that moment in time, we’re waiting for the dust to settle. And it was almost like the next day they started pushing buttons, pausing the talk about the bonded warehousing, also looking at different sourcing options. Well, they’re also doing that today at a SKU level. So they’re really looking at what can I do? And we’re trying to connect with them on their forecasts over the next week, the next six weeks, and obviously the rest of the quarter.

So forecasting that demand from a domestic perspective is what we’re really having conversation on right now. Is there,

Ken Hoexter, Analyst, BofA: I know you guys tried to quantify the international exposure. It was more specific to China. Is there an overall what is coming in from international? And so thinking about the flow through of the air pocket because it sounded like given you’re more domestic or transloading, it doesn’t impact it, but there still is that, as you mentioned, the potential for the air pocket on your customers. So what’s the exposure?

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: Yeah, I think, Darren kind of mentioned the numbers around 30% or so of our business originates off the West Coast. And then you can say 30% or so of that comes from China. So you could extrapolate that out to does is our business impacted nine ish percent or something, that’s to be determined. But that’s also to be determined based on the timing of international move versus domestic. So we’ll have to see.

I do think that some of our customers have taken a little bit more of an aggressive stance and kept a constant flow. Others still played in that wait and see mode. And that’s what gives us a little more variability than that number if you just put the two together.

Ken Hoexter, Analyst, BofA: So that was a no, we’re not commenting on seasonality or no, there’s no seasonality difference in no. Alright. So switching over to the digital marketplace. Good idea to transition.

Brad Delco, SVP of Finance and IR, JB Hunt: I would say too. I mean, Ken, you know that sometimes I like expressing the, you know, passionate I’m passionate for the the responses that I give to you sometimes. But we’ve talked about this pull forward and, you know, I think we’re trying to be logical to say that, hey, there are some customers that may have done done some of that. And if they have, that means that there should be warehouses stuffed with inventory on the West Coast that will still need to advance and move. And so I think to your question, maybe it’s a week or two or three weeks from now or four weeks from now, we have better insight to say, hey, We’re not seeing the air pocket because our customers have brought in inventory and we’re gonna be still moving that inventory.

That will be enough to to bridge. Mhmm. And and we could see that. And then by that point, we’ve seen additional cargoes land on the West Coast and start wanting to move additional freight. So it I mean, it’s still it’s still a lot of uncertainty, but I like and I’ve shared this before.

The volatility we’ve seen in imports and comparing that to the rail volumes you referenced earlier, those are pretty nicely correlated. But if you look at Hunt’s volumes over that period of time, it’s a lot smoother. And I think that’s something to be mindful of when you think about, hey, we know there’s a relationship between international intermodal and imports. It’s more directly and probably more timely correlation. But when you look at J.

B. Hunt’s monthly volumes that we’ve given you, you’ve seen it’s a lot smoother than the volatility that you may see in the weekly poor reports or whatever everyone’s tracking. So Spencer, maybe just

Ken Hoexter, Analyst, BofA: a little bit on the the digital marketplace, ICS JB three sixty for a quick second here. ICS continues to improve its losses. It greatly shrunk its employee base. Is this a move you know, you’re moving back toward profitability quicker? And then just a side note, the three sixty marketplace was down to 34% of the brokerage, whereas two years ago, was 65% of the brokerage.

I would have imagined digitization would have gotten larger, not smaller.

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: Yeah. Yeah. And I appreciate that question. You know, as far as the momentum inside ICS, we still have that today. Regarding the marketplace and automation, when you think about what we did specifically coming in to the first part of twenty twenty four and throughout the first half, really focusing on keeping our customers freight safe and secure.

We did reduce the level of automation to protect our customers freight from cargo theft and added more manual intervention. Today, I would shift the automation story to really doing what we can to automate and validate carrier credentials that a carrier is who they say they are, eliminate fraud, and empower our people to know that in a way that then still allows them to execute the business. So I think you’ve probably seen a trough from an automation perspective and then the advancements in leveraging AI to do that fraud detection is where we really spent a lot of our money over the last several quarters inside ICS to really put us in a spot to go forward.

Ken Hoexter, Analyst, BofA: It’s helpful. I’m just going to jump over to different parts of the company, right? So dedicated fleet, you targeted adding 800 to 1,000 trucks in capacity sales, offset by fleet losses through the second quarter. Any way you want to quantify what’s going on in terms of growth versus the fleet losses and how that was a big discussion for the quarter?

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: Yeah, I’ll just say really quickly, I think Brad mentioned the kind of losses ending really through June and July, that’s still on track. And then also when we think about our pipeline, our pipeline is as strong as it’s ever been. And we’re looking to make sure that we can convert those and have our goals achieved from a growth side. Anything else you’d add there, Brad?

Brad Delco, SVP of Finance and IR, JB Hunt: Yeah, mean, the only real change in tone there, we still talked about seeing net fleet growth this year. So the 800 to a thousand trucks, it’s an annual target that is on a net basis. We used to talk about it a thousand to 1,200 on a gross basis. I just think it was cleaner for us to talk about it on that perspective. We still are targeting to see net fleet growth this year.

The one thing that we did soften our tone on is growth in revenue and operating income in DCS for this year. And reason being is just the timing of when these deals close with all the uncertainty we’ve had in the market. Signing up on these five year contracts, maybe there’s been pushed or delayed a month or two. And given that each of our dedicated deals has about a six month startup window, If we’re not at a point where we’re seeing contribution, positive contribution dollars yet, some of that benefit may flow more into ’26 versus ’25. And so, but overall, I would say, think the performance of our dedicated portfolio and businesses continue to shine very brightly relative to our industry.

And I think we’ll get back on a pretty good growth track once we get past these known losses that we’ve been speaking to for quite some

Ken Hoexter, Analyst, BofA: time at this point. And certainly some of your dedicated peers talk about the increased competitiveness in the market and what that’s doing in pricing. Stacy, let me come back on intermodal. Just understand. So you’ve got 30% of the capacity stacked.

I asked the question, I think, the call about why not unload more assets, get rid of some of it so you can does that make the bounce back quicker? Maybe just to clarify, like, throw out thoughts of, you know, wouldn’t it if there were less assets standing on the sideline, couldn’t that enhance? But of course, you’ve already paid for it and so you’ve got the argument of why would I get rid of it if it’s already paid for and depreciated. So how do you think about the, you know, the market as it prepares for an upturn? Is it more hampered than normal or not necessarily?

Stacy Griffin, SVP of Intermodal, JB Hunt: I’d say when it comes to our our fleet, and, yes, we have we have a lot of container stack, and that’s our investment and our future growth and supporting our customers. Because there was a time coming out of COVID where our customers wanted more from J. B. Hunt in terms of capacity than what we could provide. And so we have a commitment, and that’s a mutual commitment with the the NSF to have a fleet that is supportive of whatever, really whatever the market throws at us.

And that stack of equipment has zero bearing on how we price inside of our bids. That’s not it doesn’t drive what we do. We we can leave those in the stack until we can make an appropriate long term economic return for unstacking them.

Ken Hoexter, Analyst, BofA: Yeah. What’s the spread between truck and intermodal right now? So, yeah, how do you I know you talked about winning on service and doing things, but how do you how do you think about this spread?

Stacy Griffin, SVP of Intermodal, JB Hunt: So in we’ve always said, for as long as I can remember, that the spread or that really drives conversion and is healthy in the East is 10 to 15%.

Ken Hoexter, Analyst, BofA: Yep.

Stacy Griffin, SVP of Intermodal, JB Hunt: And in the West, it’s more like 20 to 30, and we’re in those zones today. We’re living in those zones today.

Ken Hoexter, Analyst, BofA: Alright. Wonderful. That’s a great wrap up. I mean, I appreciate we had a lot of different subjects real quickly, but thinking about, you know, kind of the the growth with with the rail service, the I like the the the you’ll find carcasses as you as you push rates, the spread between the the rates, the ability to, I I think, again, focus on the on the margin. You’re focused on the margin, but so much unknown right now given what’s going on with the customers.

But thank you very much for your insights and thoughts, and I appreciate your time.

Stacy Griffin, SVP of Intermodal, JB Hunt: Thanks again.

Spencer Fraser, EVP of Sales and Marketing, JB Hunt: Thanks again.

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