Truckload carrier J.B. Hunt Transport Services said its net income dropped $7 million in the third quarter this year to $50.8 million despite a 4% gain in revenue to $892 million.
On top of that, the carriers reported its net interest expense climbed to $12.5 million in the third quarter, as compared to $5.2 million in the same quarter last year due to higher levels of debt. Hunt has been expanding its fleet over the past year, largely to support its growing intermodal operations: its total container and trailer fleet grew 11% by the end of the third quarter this year to 57,489 units, and Hunt has added 200 drayage tractors to its operations since the start of 2007.
“In the early part of this decade we embarked upon a plan to dramatically improve our margins, our return on invested capital, our returns to shareholders and our free cash flow,” said Kirk Thompson, J. B. Hunt’s president & CEO, in the carrier’s earnings release.
“We are by no means satisfied with our results, but frankly we can’t be too disappointed in the level of earnings power the company has in a particularly difficult environment,” he added. “Our intermodal business clearly represents the foundation of our earnings resiliency and demonstrates that our company is no longer driven by the cyclicality typical of a truckload [business] model.”
Hunt noted its intermodal operating income in the third quarter increased 32% to $61 million on 17% higher revenues of $429 million compared to the same period in 2006, while its truckload revenue plunged 61% to $9.2 million on 16% lower revenues of $208 million. Dedicated contract carriage operating profits also dropped 21% to $24.4 million on 1% lower revenues of $237 million.
The company said TL loads were down 11% in the third quarter this year, compared to the third quarter 2006. While it reduced its tractor fleet 11%, the carrier said its rate per loaded mile, excluding fuel surcharges, decreased 3.8% during the current quarter. Most of the rate decline was a result of lower spot and unplanned business and a significant change in its freight mix, Hunt reported. “Freight demand overall remained very soft throughout the quarter,” said Thompson in Hunt’s earnings release.