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Home » J.B. Hunt requests arbitration to ensure fair revenue division in BNSF deal
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J.B. Hunt requests arbitration to ensure fair revenue division in BNSF deal

January 3, 2017
DC Velocity Staff
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Truckload, logistics, and intermodal company J.B. Hunt Transport Services Inc. said today that it has asked to arbitrate its landmark intermodal revenue-sharing agreement with BNSF Railway Co. to determine if the revenue from the service is being divided equitably.

The move by Lowell, Ark.-based J.B. Hunt marks the first time in nearly 12 years that the agreement has been arbitrated. In 2005, an arbitrator ruled that the terms of the joint agreement be adjusted in favor of Fort Worth, Texas-based BNSF. The arbitrator's award required Hunt to take a one-time charge of $16.5 million, which it eventually recovered through price increases.

The agreement stipulates that its terms be reviewed quarterly to ensure fairness in the division of revenue. Either side can request arbitration at any time. Today's arbitration request pertains to the allocation of revenue generated after May 2016.

The initial agreement was reached in 1990, and was considered unprecedented for its time. It is believed to be different from remaining agreements of this type because railroads charge other intermodal service providers a fixed fee for their services. Benjamin J. Hartford, transport analyst at Robert W. Baird & Co., an investment firm, said he was surprised by Hunt's move because it was perceived the agreement had always tilted in the trucker's favor. However, Hartford agreed with Hunt executives who said the arbitrator's award will have no impact on customer service or on Hunt's financial results.

In a statement, Hunt said the joint service had experienced significant growth and complexity since the last time a third party reviewed the allocation of revenues. Hunt said the request is part of the normal course of business in a long-term relationship, but acknowledged that it could be lengthy and time consuming.

Trucking Rail Intermodal Truckload
KEYWORDS BNSF Railway Co. J.B. Hunt
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