J.B. Hunt Pulls Far In Front Of Rivals

by Jan Cottingham  on Monday, May. 14, 2012 12:00 am  

"During 2009, that was really the worst year in terms of the recession," McReynolds told Arkansas Business. "We consider that year to be the worst recession since the Great Depression. And its impact on our business was very dramatic. Part of the improvement that we experienced in 2010 and 2011 was just coming off of that bottom and the economy improving."

USA Truck has fought with losses every year since a $3.14 million profit in 2008, and in 2011, the company reported a net loss of $10.8 million.

USA Truck experienced "significant difficulties in implementing a new enterprise management software system," CEO Cliff Beckham said in a February news release.

"These difficulties caused a lack of visibility of freight in our system and numerous customer service disruptions. The service failures and lack of confidence in booking freight caused us to lose a percentage of our loads with many customers, often the most operationally demanding, highest paying loads."

P.A.M. Transportation reported a net loss of $2.9 million last year, compared with a net loss of $654,728 for 2010.

Dan Cushman, president and CEO of P.A.M., told Arkansas Business that 2011 was difficult for the company because P.A.M.'s fleet of 1,750 trucks was aging and the company struggled to maintain it.

Among P.A.M.'s weaknesses going into the recession, Cushman said, was that the company was seen in the industry as only an automotive carrier. The reality, however, was harsher. "It was worse than that. It was one customer," Cushman said, declining to name the single company on which P.A.M. depended.

Cushman's immediate goal was to diversify P.A.M.'s customer base and reduce its reliance on the faltering U.S. auto industry.

Diversification Limits Exposure

J.B. Hunt has four primary segments.

  • Intermodal, the company's largest segment, operates the largest fleet of privately owned containers in North America, operating in a nationwide rail network.
  • The dedicated contract services (DCS) segment designs, develops and executes customer-specific supply chain networks.
  • Integrated capacity solutions (ICS), founded in 2007, seeks to connect shippers to carriers for efficient transportation of goods.
  • The truck segment (JBT), which makes it one of the nation's largest publicly traded truckload carriers.

In the last 10 years, the company has diversified, moving past full-truckload shipping. Instead, it has emphasized intermodal - the movement of containerized cargo using different forms of shipping - and dedicated contract services.

This shift in strategy meant that J.B. Hunt was less exposed to losses when the Great Recession hit full force in 2008 and devastated the trucking industry, or at least the asset-based trucking sector, a leading indicator of economic trends.

The company's flexibility and its dedication to cost-cutting and efficiency have served J.B. Hunt - and its shareholders - well.

"During 2011, we began implementing improvements to the approach we take with our larger, more complex customers and we are satisfied so far with the results of these efforts," Roberts noted in a Jan. 26 news release.

"The primary objective in collaborating with customers is to find new ways to integrate our complementary business segments to drive out cost and create efficiency. We will continue to invest in customer centric services that produce sufficient rates of return and sustainable cycles of cash for further reinvestment and innovation in transportation solutions."

 

 

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