J.B. Hunt to pay $18 million in arbitration with BNSF

Lowell-based carrier J.B. Hunt Transport Services provided an update Wednesday (Oct. 10) in an arbitration between the company and Fort Worth, Texas-based BNSF Railway Co. and will pay $18.3 million related to charges claimed by the railroad company for customer services between April 2014 and May 2018.

The payment is one of several pre-tax charges the carrier will have in the third quarter for a total of $39 million, according to a news release. The charges are expected to lower earnings by $28.9 million, or 26 cents per share, in the third quarter and for 2018. The company plans to report third-quarter earnings after the market closes Monday (Oct. 15) and will host a conference call from 4:30 p.m. to 6 p.m. to discuss the report.

The details are confidential regarding the arbitrators’ interim award the carrier received Oct. 5, according to the release, but the company was pleased with several components in it. Over the next several months, other issues related to the arbitration will be decided as J.B. Hunt and BNSF submit more information requested by the arbitrators.

BNSF, in a separate news release, also was pleased with the decision and “should result in favorable revenue division adjustments to BNSF for historic periods and going forward, resulting in payments to BNSF and improving the efficiency of our joint service product. With the key issues resolved, BNSF looks forward to working with (J.B. Hunt) to finalize the award and implement its directives.”

On Jan. 3, 2017, the companies announced they would seek a third-party review of how revenue is shared between them with regard to their joint-service agreement and J.B. Hunt’s intermodal segment, which accounted for $407.376 million, or 65% of the company’s operating income in 2017. The agreement between the two companies was previously reviewed more than 10 years ago. The carrier’s intermodal segment started in 1989 when it formed a partnership with what is now BNSF.

Also in the J.B. Hunt news release, the company announced it had settled two lawsuits with existing and former drivers who claimed they had unpaid wages, didn’t receive meal and rest breaks and other issues. The company will pay a $18.1 million pre-tax expense in the third quarter related to the settlements, which are pending court approval. J.B. Hunt also will face a $2.6 million pre-tax charge in the third quarter as a result of a customer bankruptcy.

Shares of J.B. Hunt (NASDAQ: JBHT) were trading at $115.51, down $2.66 or 2.25%, on Wednesday afternoon. In the past 52 weeks, the stock has ranged between $131.74 and $100.25.