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J.B. Hunt to expand intermodal container fleet by 40%

‘Intermodal capacity challenges’ addressed in joint initiative with BNSF

J.B. Hunt growing container fleet to 150,000 units (Photo: Jim Allen/FreightWaves)

J.B. Hunt Transport Services announced Wednesday plans to grow its intermodal container fleet to 150,000 units over the next three to five years. The additional capacity would expand the fleet by more than 40% from the close of 2021. J.B. Hunt will also look to place additional chassis in service “based on market need.”

The purchasing plan is part of a joint initiative with BNSF Railway “to substantially improve capacity in the intermodal marketplace.”

J.B. Hunt (NASDAQ: JBHT) said the increases reflect “current and projected trends” in efforts to meet growing customer needs. The intermodal industry has struggled with slower rail service in recent years as the railroads advanced precision scheduled railroading initiatives. The issues came to a head during the pandemic as warehouses struggled to find the dockworkers needed to timely turn the boxes.

J.B. Hunt’s intermodal unit saw monthly container turns drop from roughly 1.85 times before the pandemic to 1.65 times during the fourth quarter. The segment’s loads fell nearly 2% year-over-year in 2021 even though average containers in service increased by 9%. On a full-year comparison, the company lost more than two loads per box in 2021 due to congestion.

In response to the bottlenecks, J.B. Hunt announced plans to add 12,000 containers to the fleet during its first-quarter 2021 call. However, supply chain and manufacturing headwinds, along with some of the new equipment being stuck in transit, have resulted in half of that order spilling over to this year.

“Over the past few years, intermodal has been disrupted by increased demand and tight capacity, resulting in poor container velocity and long dwell times,” stated John Roberts, president and CEO, in a press release. “Together, J.B. Hunt and BNSF will enhance their work to bring back the consistency and reliability customers expect with intermodal services and further embrace intermodal conversion and transloading services.”

BNSF (NYSE: BRK.B) will increase its capabilities at multiple facilities, provide property in major intermodal hubs like Southern California and Chicago to improve efficiency, and add railcars to accommodate the increase in containers as part of the initiative.

“We will raise the bar on service to the next level through technology and innovation as we further integrate our platforms with real-time data exchanges,” Katie Farmer, BNSF president and CEO, said. “We want our customers to enjoy the best of both worlds: economical and environmentally friendly service delivered by transportation’s premium providers.”

Both companies will utilize digital freight-matching platform J.B. Hunt 360 “to improve efficiencies in rail transport.” Based on data transactions conducted through 360, J.B. Hunt estimates that between 7 million and 11 million loads could be moved off the highway and onto rail.

J.B. Hunt’s current intermodal fleet includes 109,000 53-foot containers as well as supporting chassis and tractors, making it the largest company-owned fleet in North America. Back-of-the-envelope math suggests the additions could add another $2 billion in revenue to the nearly $5.5 billion the segment generated last year.

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.