J.B. Hunt, BNSF ally to expedite shipping

A view of the main entrance Thursday, July 6, 2017, at the J.B. Hunt Transport headquarters in Lowell. (NWA Democrat-Gazette/BEN GOFF)
A view of the main entrance Thursday, July 6, 2017, at the J.B. Hunt Transport headquarters in Lowell. (NWA Democrat-Gazette/BEN GOFF)

J.B. Hunt Transport Services is teaming up with BNSF Railway to offer a service called Quantum, an intermodal product targeted at service-sensitive highway freight.

The companies said Tuesday they will work together on the project which will be housed at a new Intermodal Innovation Center at BNSF headquarters in Fort Worth, Texas. The new venture will involve three J.B. Hunt employees who will work alongside five employees from BNSF.

The service will target freight that typically moves exclusively on highways and shift it to intermodal transport.

"Due to factors like complexity, timing and special handling, it is often viewed as too sensitive for intermodal service and moved via highway," Spencer Frazier, executive vice president of sales and marketing at J.B. Hunt, said in response to questions. "Quantum provides the consistency, agility and speed needed to convert service-sensitive freight from the highway to the rail/intermodal."

The companies said with Quantum they anticipate 95% on-time delivery service that will be about a day faster than traditional intermodal offerings.

Based on its internal research, J.B. Hunt projects 7 to 11 million loads of freight annually could be shifted from over-the-road truck service to intermodal service. Shifting from road to rail also would reduce a shipment's carbon footprint by 60%, the companies said.

"Our joint service and capacity are unmatched," Darren Field, president of intermodal at J.B. Hunt, said in a statement. "When combined with J.B. Hunt's broad range of flexible solutions, there's no provider in the industry who can match Quantum's ability to move your most important freight."

Marc Scott, assistant professor in the Department of Supply Chain Management at the Sam M. Walton College of Business at the University of Arkansas, said in response to emailed questions said the deal shows modern transportation companies can provide innovative and unique solutions by integrating technology between two organizations.

"This speaks to the growing role that facilitated supply chain visibility can play in providing unique opportunities to improve service and gain cost efficiencies in supply chain movements for customers," he said.

He said the partnership is disruptive to the current shipping model.

"This is probably one of the best recent examples of a partnership that directly addresses shippers' need to gain supply chain resilience capabilities. It's very valuable," Scott said.

Pricing on the customizable service will vary based on need, the companies said but it's expected to range between that of traditional intermodal service and over-the-road service.

Shares of J.B. Hunt closed at $174.90, up 9 cents in trading Tuesday on the Nasdaq. Shares have traded as low as $163.66 and as high as $209.21 over the past year.

The news was announced at FreightWaves' F3: Future of Freight Festival 2023 in Chattanooga, Tenn.

In September, J.B. Hunt said its subsidiary J.B. Hunt Transport Inc., would buy the brokerage operations of BNSF Logistics, an affiliate of BNSF Railway Company, Inc. The terms of the deal were not released.

The Quantum partnership is independent of the acquisition, a J.B. Hunt spokesman confirmed Tuesday.

In mid-October, J.B. Hunt executives said its third quarter results were hampered by a continuing freight recession.

J.B. Hunt reported net income for the quarter ended Sept. 30 of $187.4 million or $1.80 per share compared to $269.4 million or $2.57 per share for the year ago period.

Third quarter revenue was $3.16 billion, down 18% from $3.84 billion last year. Excluding fuel surcharges revenue was down 15%.

The company said revenue in the third quarter was hampered by a decrease in revenue per load in its intermodal and truckload segments, a decrease in volume in its integrated capacity solutions segment, and a drop in stops in its final mile services segment.

Lower revenue across all its segments, along with higher equipment and insurance costs, dragged down operating income, the company said.

J.B. Hunt's intermodal segment saw revenue of $1.56 billion for the quarter, down 15% from last year. Operating income was $128 million, down 41%. The company said demand was up but the revenue per load was down because of changes in the types of freight, customer rates and fuel surcharges.