J.B. Hunt Transport Services Inc., said yesterday it named Shelley Simpson, president of Hunt's Integrated Capacity Solutions (ICS) unit, to run the company's truck operations, which has struggled in recent years as more long-haul traffic is converted from highway transport to rail intermodal.
Hunt said that Simpson will maintain her current responsibilities at the ICS unit, which provides truck brokerage services for the Lowell, Ark.-based transport concern.
Hunt also has named Greg Breeden as senior vice president of marketing and network development for the truck unit. Breeden returns to Hunt after 20 years at truckload carrier Crete Carrier Corp. Finally, Hunt has transferred Steve Rogers from the company's dedicated contracted services unit to become the truck unit's vice president of operations.
Hunt's truck unit, which was the foundation of the company for many years, has suffered from prolonged traffic declines and lower truck utilization. Its third quarter revenue of $97 million was 17 percent below year-earlier levels. Operating income of $600,000 fell 84 percent year over year.
Rates per mile excluding fuel surcharges fell 0.4 percent year-over-year, due in part to a 6-percent decline in the average length of haul. Cost savings from cuts in the unit's tractor fleet were more than offset by lower rig utilization as customer demand cooled and new driver hours of service regulations took drivers and rigs off the road and reduced fleet productivity, Hunt said.
Hunt's truck unit is the smallest revenue contributor of its four divisions. The largest, its intermodal unit, posted a third-quarter operating income of $118 million on revenue of $890 million, increases of respectively 21 percent and 12 percent year over year.
Hunt's ICS unit posted revenue of $137 million in the quarter, up 13 percent from year-earlier levels. Operating income, however, declined 48 percent to $2.8 million. The company blamed the fall-off on a decline in gross profit margin and higher personnel costs.
Hunt's founder, Johnnie B. Hunt, was one of the first trucking executives to recognize the value of rail intermodal to move his customers' trailers and containers over long distances. As long-haul truckload services suffered from high fuel prices, road congestion, and sporadic driver shortages, more tonnage converted to intermodal, which promised a less-costly, more fuel efficient, and more environmentally friendly shipping alternative.
Benjamin J. Hartford, transportation analyst at Robert W. Baird & Co., a Milwaukee-based investment firm, forecasted the trucking unit will post a 1.3-percent profit margin before interest and taxes in 2013. That is far below the unit's peer group and the unit's 2005 margin peak of 11.6 percent, Hartford said in a note today.
