J.B. Hunt Transport Services (JBHT) Deutsche Bank’s Chicago Industrials Summit summary

Market cycle and demand trends

• Early stages of a supply correction are underway, with tighter capacity and some positive demand signals, especially as ISM remains above 50 for several months.

• Housing starts are a key missing demand driver, but opportunities for stronger demand remain.

• Dedicated contracts provide stability, with double-digit EBIT margins for 11 years, while intermodal pricing typically lags truckload by 2-3 quarters.

• Recent financial improvements are attributed to controllable factors, with further pricing tailwinds expected.

Intermodal value proposition and pricing

• Intermodal's value proposition is at its strongest in over a decade, driven by high fuel prices, rising truckload rates, and improved rail service.

• Demand for intermodal has increased, but recent environments limited full value capture; significant pricing opportunities are anticipated through 2027.

• The gap between intermodal and truckload pricing is currently wider than historical norms, but is expected to normalize as truckload rates rise.

• Mini-bids have surged, bringing new customers and repricing opportunities, especially in the Eastern network.

• Consistent rail service is enabling more highway-to-rail conversions, with five consecutive quarters of double-digit Eastern volume growth.

Operational efficiency and driver dynamics

• In-house drayage operations and efficient driver recruitment provide a competitive edge, with only 10-15% of drayage outsourced.

• Driver shortages persist, leading to wage inflation and increased recruitment efforts; attractive job structures help retain drivers.

• Margin targets for intermodal are set at 10-12%, considered appropriate for the capital and risk involved.

• Cost-to-serve initiatives have exceeded $135 million in savings, with ongoing focus on discipline and leveraging technology, including AI, for further gains.