BNSF requests arbitration to determine revenue division in deal with Hunt

BNSF Railway Co. has joined J.B. Hunt Transportation Services Inc. in requesting to arbitrate the revenue division of an intermodal agreement between the transport giants.

Fort Worth, Texas-based BNSF made the announcement in a brief statement late yesterday. Lowell, Ark.-based Hunt had issued a similar statement earlier in the day.

BNSF declined additional comment, citing the confidentiality of the agreement. BNSF, like Hunt, pledged that service levels would not be affected by the arbitration proceedings.

The agreement, signed in 1990, has not been reviewed by a third party since 2005. Then, an arbitrator ruled that the terms of the revenue division be adjusted in favor of 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 how revenue is allocated. Either side can request arbitration at any time. Yesterday's arbitration request pertains to the allocation of revenue generated after May 2016.

In its 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.