Will Diminishing Profits be a Reoccurring Trend in Trucking?
Intermodal pricing caused profits at J.B. Hunt Transport Services to take a hit in the third quarter. This drop caught some by surprise, as freight volumes and revenues have increased a bit over the past several months. In addition, a recent ATA report noted that trucking activity in the future is generally forecasted to be positive. But does this profit drop at such a well-known trucking carrier indicate that things in the future may not be as positive as once predicted?
This drop is likely a result of the constant battle of rates between US freight shippers and trucking companies. Lower spending, high inventories, and larger capacities have led to a depressed demand throughout most of 2016. Other carriers, such as Chattanooga’s Covenant Transportation Group announced that it expected a third-quarter profit drop as well.
According to both the Cass Truckload Linehaul Index and general economic reports within the field over the past year, pricing and volumes have been lower than expected this year. But there were also several notable increases, which indicates that J.B. Hunt’s drop in profit may be the type of incident which is not indicative of a future trend. Though activity may not be quite as strong as trucking companies are looking for heading into the end of the year, hopes are generally high for satisfactory performance over the next year.