Image:J.B.Hunt
U.S.A. Intermodal Growth Meets Profit Margin Pressures
J.B. Hunt, the country’s largest domestic intermodal operator, is seeing mixed signals from the market. While volumes are climbing, especially in the East and Mexico, the company’s executives say they’re navigating a fog of uncertainty brought on by shifting U.S. trade policy, stiff competition from trucking, and a lingering freight recession.
Tariffs—particularly the 10% across-the-board duties imposed by the Trump administration, along with steep retaliatory tariffs of up to 145% on goods from China. The broader concern: how these tariffs could reshape both the supply and demand landscape for freight.
“We recognize there are a lot of questions right now about how tariffs may impact the market,” said Spencer Frazier, Executive VP of Sales and Marketing at J.B. Hunt, “We believe they have the potential to impact both supply and demand, but the magnitude and timing is difficult to predict.”
Customers in ‘Wait and See’ Mode
What’s keeping shippers cautious? It’s not just tariffs, though those loom large. Frazier explained that many clients are rethinking their sourcing strategies and shipping routes—but very few are making concrete changes just yet.
“Our customers continue to plan for multiple what-if scenarios, but most of them are waiting for the dust to settle,” said Frazier. “Some are looking at altering supply chain freight flows and sourcing origins, but those are long-term moves.”
The murky trade waters are making it tough for companies to forecast future shipping needs. J.B. Hunt’s intermodal volume originates from the West Coast—some portion of which is connected to Chinese imports—but executives say it’s difficult to quantify how much of that business might be affected by tariffs.
Intermodal Margins Under Stress
Despite the strong volumes, J.B. Hunt continues to battle squeezed profit margins in its intermodal segment. Revenue climbed. Truckload competition is partly to blame. Depressed trucking rates have driven many customers to stick with the highway rather than shift to rail, dragging down intermodal prices and limiting the company’s pricing power.
Even so, J.B. Hunt has been able to secure modest pricing improvements with certain clients. That balancing act—keeping service levels high while attempting to push for rate hikes—is central to the company’s intermodal strategy moving forward.
Freight Recession Shows No Sign of Easing
The broader economic backdrop isn’t doing J.B. Hunt any favors. The freight recession, now dragging into its third year, continues to apply downward pressure on pricing across the logistics space. Overall, the company’s revenue dropped.
Still, the company remains bullish on long-term intermodal prospects. Especially in regions like the East—where rail service has remained strong and cost pressure from trucking is intense—rail freight continues to offer an attractive alternative.
For now, though, J.B. Hunt is steering cautiously. With a volatile policy environment and freight recessionary headwinds, the path forward for intermodal remains bumpy—even as volumes grow.
Source:Trains
