US Freight Recession Keeps Getting Deeper

A prominent freight company is experiencing a significant decline in its stock value following subdued trucking volumes, resulting in lower-than-expected earnings for the first quarter in terms of both profit and sales.

JB Hunt witnessed a sharp drop in its shares, plunging by up to 13% on Wednesday, subsequent to the announcement of its first-quarter profit of $127.5 million. This figure reflects a considerable decrease of $70.3 million compared to the earnings recorded during the same period last year. Additionally, the company’s revenue fell short of expectations, declining by 9% to $2.94 billion, missing the forecasted $3.11 billion.

The challenges faced by this prominent firm reflect broader concerns within the freight market, which has been grappling with a prolonged slowdown since the onset of the pandemic. Contributing factors to this contraction include sluggish sales and an oversupply of trucks.

Ken Hoexter, senior transportation analyst at Bank of America, highlighted the persistent weakness in demand, noting that spot pricing in the market has remained historically low. JB Hunt had initially flagged concerns about a potential “freight recession” during last year’s first-quarter earnings conference call, attributing it to depressed goods demand following pandemic-induced over-buying, which has continued to weigh heavily on the freight and transport industry throughout 2023.

This prolonged downturn has been characterized by a rise in trucking unemployment and the departure of several major carriers from the market. According to WSJ, current trucking spot rates have dropped by 6.5% since the beginning of the year, as reported by DAT Solutions.

Part of JB Hunt’s challenges stem from increased competition from Eastern trucking companies, particularly impacting its domestic intermodal services. The company’s truck-to-rail offerings, a significant revenue segment, experienced a decline of 9% compared to the same quarter last year.