J.B. Hunt, BNSF to expand intermodal capacity; carrier’s stock soars to new high

Lowell-based carrier J.B. Hunt Transport Services Inc. and Fort Worth, Texas-based railroad company BNSF Railway Co. announced Wednesday (March 16) a joint initiative to improve intermodal service. Analysts praised the move as J.B. Hunt shares hit a 52-week high.

According to a news release, J.B. Hunt plans to increase its intermodal fleet by more than 40% to as many as 150,000 containers in three to five years. J.B. Hunt has more than 109,000 containers and operates the largest company-owned intermodal fleet in North America. The carrier has completed more than 4 million intermodal loads since 2020.

BNSF is expected to increase capability at multiple intermodal facilities and will provide several properties around key intermodal hubs, including in Southern California and Chicago, to increase terminal efficiency. According to the release, BNSF operates the largest intermodal rail network handling about 1 million more intermodal units each year than any other railroad. BNSF also offers the fastest intermodal route between Southern California and the Midwest, the release shows.

“Over the past few years, intermodal has been disrupted by increased demand and tight capacity, resulting in poor container velocity and long dwell times,” said John Roberts, president and CEO of J.B. Hunt. “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. This priority falls directly in line with J.B. Hunt’s mission statement to create the most efficient transportation network in North America.”

BNSF is expected to “bolster its railcar equipment” to accommodate the planned increase in container capacity, according to the release. This year, BNSF plans to add about 1,200 well cars that can carry nearly 2,500 containers, according to the company. It will add additional cars in the coming years as needed.

In a report, analysts Justin Long and Jack Atkins, and senior associate George Sellers and associate Cameron Hoglund, all of Little Rock-based Stephens Inc., expect increased investments in real estate and railcars.

Also, J.B. Hunt will add supporting chassis as needed. Over the years, the two transportation companies have invested billions of dollars to meet intermodal demand.

“More than 30 years ago, J.B. Hunt Transport Services and BNSF predecessor The Atchison, Topeka and Santa Fe Railway Co. loaded a Hunt trailer onto a railcar to help usher in the modern age of intermodal freight transport,” said Katie Farmer, BNSF president and CEO. “BNSF’s industry-leading service combined with J.B. Hunt’s unparalleled intermodal product has set the standard for seamless door-to-door service. 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. We want our customers to enjoy the best of both worlds: economical and environmentally friendly service delivered by transportation’s premium providers.”

The companies are expected to use technology, including J.B. Hunt’s platform, J.B. Hunt 360, to improve efficiencies in rail transportation. According to the release, the platform is one of the few in the industry that supports intermodal services. J.B. Hunt analysis shows that an additional 7 million to 11 million shipments could be converted to intermodal.

Through the first 10 weeks of 2022, U.S. intermodal traffic is down 2.6%, compared to the same period in 2021, according to the Association of American Railroads.

In 1989, J.B. Hunt and BNSF developed a double-stack shipping service that complemented rail and trucking services, a first for modern transportation, the release shows.

“Bottom line, we view this as a very positive announcement as it illustrates the increasingly collaborative approach (J.B. Hunt) and BNSF are taking to capitalize on a sizable addressable market for intermodal,” the Stephens analysts said. “We believe this supports our bullish view on (J.B. Hunt) coming out of our recent intermodal field trip, and we are not surprised to see a more offensive approach on the heels of recent changes in rail/(intermodal) partnerships.”

The analysts maintained an overweight, or buy, rating on J.B. Hunt stock and a 12-month target price of $232.

Shares of J.B. Hunt (NASDAQ: JBHT) were trading Wednesday morning at $213.43, up $14.54 or 7.26% after hitting a 52-week high of $215.30 in heavy trading. In past 52 weeks, the stock has ranged between $155.11 and $215.30.