J.B. Hunt to buy brokerage assets of BNSF affiliate

Lowell-based carrier J.B. Hunt Transport Services Inc. will acquire the brokerage operations of an affiliate of Fort Worth, Texas-based rail company BNSF Railway Co. Financial terms of the deal were not disclosed.

According to a Thursday (Sept. 14) news release, J.B. Hunt will pay cash to acquire assets of BNSF Logistics LLC, which provides third-party logistics services (3PL), including truckload, flatbed, temperature-controlled, drayage, expedited and less-than-truckload. The deal is expected to be completed by the end of the year.

In a report, analysts Justin Long and Jack Atkins and associates Brady Lierz, Grant Smith and Collin Nieman, all of Little Rock-based Stephens Inc., said, “this deal is another proof point around (J.B. Hunt’s) enhanced relationship with BNSF. In addition, this should provide additional scale to (J.B. Hunt’s) existing brokerage operations at an attractive purchase price…This seems like a solid strategic tuck-in acquisition.”

BNSF Logistics generated $800 million in revenue in 2022, according to the report. However, the release shows that BNSF Logistics also offers warehouse, retail specialty, heavy-haul and project services that are not included in the deal. The Stephens analysts noted they don’t know the size of the brokerage business within BNSF Logistics.

“As we continue to work with BNSF Railway to develop solutions that drive value for customers, we recognized a unique opportunity to combine the companies’ efforts to serve the transportation market with 3PL services and leverage the investments J.B. Hunt has made in our technology platform, J.B. Hunt 360,” said CEO John Roberts.

Following the transaction, BNSF Logistics will become part of J.B. Hunt’s brokerage segment, Integrated Capacity Solutions. J.B. Hunt will continue to provide the third-party logistics services to the rail company after the deal is completed.

“BNSF Logistics has shown strong performance in serving customers of all sizes,” said Brad Hicks, executive vice president of people and president of highway services at J.B. Hunt. “Complemented with our best-in-class intermodal and J.B. Hunt 360box power-only service offering, this acquisition will provide a compelling value proposition for customers, growth opportunities for J.B. Hunt and greater service capabilities for BNSF Logistics’ employee and agent model.”

In 1989, J.B. Hunt and the company that would become BNSF developed a double-stack shipping service that complemented rail and trucking services, a first for modern transportation. In March 2022, the two companies announced a joint initiative to improve intermodal service. At the same time, J.B. Hunt announced plans to increase its intermodal fleet by more than 40% to as many as 150,000 containers in three to five years. The intermodal segment accounted for 47.4% of the carrier’s $14.81 billion revenue in 2022.

“This agreement with J.B. Hunt reflects our companies’ shared commitment to provide industry-leading intermodal service to our customers,” said Katie Farmer, president and CEO of BNSF Railway. “This continues more than 30 years of partnership between BNSF and J.B. Hunt and builds on our announcement to further integrate our joint services.”

In a Wednesday (Sept. 13) Morgan Stanley investor conference, J.B. Hunt executives said the freight industry is “coming out of a freight recession,” a FreightWaves article shows. J.B. Hunt President Shelley Simpson said customers have completed inventory destocking, and some expect freight volumes to rise late this year.

According to the article, Simpson was more cautious about the industry outlook, but internal forecasts show a “slow and steady up.” Executives also noted rail service has improved, and the company has been taking market share in recent quarters, outpacing the broader industry.

Between January and Sept. 9, U.S. intermodal volume is down 9% from the same period last year, according to the Association of American Railroads. For the week ending Sept. 9, the volume fell by 3.8% from the same week last year.

Shares of J.B. Hunt (NASDAQ: JBHT) closed Thursday at $190.68, up $1.33 or 0.7%. In the past 52 weeks, the stock has ranged between $156.28 and $209.21.