JB Hunt Transport Services Inc Morgan Stanley's 14th Annual Laguna Conference

You bet. Thanks, Ravi. Appreciate you having us.

Agreed. They may agree or disagree, but everybody's like, "What did J.B.

Well, I feel like you set the bar real high for this answer to be somewhat profound.

Well, historically, we've not really been very open about more intra-quarter trends, but I think it's fair to assume, because the availability of data is widely available, that we have continued to see really strong demand for our services over the course of, well, the quarter, but also most of our businesses. I think final mile might be the exception, and we've talked about some of the unique things going on there. Really, it has been a progression, and going back to last year, we talked about, "Hey, this feels really just supply driven." This goes back to, I guess, comments we made in January about fourth quarter. We get forecasts from customers, and what we were seeing was, hey, the demand is coming in line with these forecasts.

What was surprising us is just the big disconnect between our ability to source capacity relative to kind of inline demand. That gave us sort of this view, hey, this is largely supply driven. I think when we updated in April, we talked about, hey, some of these forecasts have actually ticked a little bit higher. Now, I think we wanted to be very clear, and I think I'm going to reiterate it here today. As a matter of fact, I believe Cass, I've never actually followed Cass Yeah but I think directionally it's probably right.

We've seen the first inflection in freight volumes since 2023. Is that right? Yep. An example would be if you look at our performance and our business in the second quarter, we saw the first double-digit volume quarter in intermodal in over a decade.

We saw double-digit volume growth in Integrated Capacity Solutions. Clearly, at least I don't believe the industry volumes are growing at that level, but we have been taking share. What I would say is the cycle continues to sort of evolve, and I would say nothing really outside the norm from our perspective. I would say one of the unique things, and a point I've made a couple of times over the last, call it quarter or so, is I think J.B. Hunt has been a little bit unique in this cycle in terms of our performance. A little over a year ago, we talked about removing structural costs, lowering our cost to serve.

When you think about the trajectory of our business, really coming out of third quarter, so much of our performance was driven by discipline on how we are managing our people, our efficiency, our productivity, and removing structural costs. About 90% of our business, so think of, or 90% of our earnings have generally come from intermodal and Dedicated. Intermodal, I think most of the industry knows that pricing generally lags truckload by, call it two quarters or so. In Dedicated, we are on five-year contracts with ECI, CPI price escalators, and that business has performed remarkably well over the up part of the cycle and the down part of the cycle. I think we are on, Andrew, help me here, 11 consecutive years of double-digit margins in that business.

As we progressed through second quarter, we saw one of the most acute changes in the cost of purchased transportation. I believe intra-quarter spot rates moved up 30%. We had to make adjustments. You saw our JBT business actually lost a little bit of money. ICS broker margins got squeezed. Here we sit today, and I would tell you all the plays that we would normally call at this part of the cycle, which is we need to dramatically ramp up our driver hiring department. We need to institute driver sign-on bonuses. We need to raise driver pay. We need to prepare for peak season. We are sort of facing all that right now.