J.B. Hunt Expects Dedicated Boost From Montgomery Case

J.B. Hunt seeks to replace private fleets as a dedicated carrier, an objective that figures to be aided by the Montgomery ruling. (J.B. Hunt Transport Services)

Dedicated carriers can expect a boost from the Montgomery v. Caribe Transport II ruling in May by the Supreme Court, according to a senior executive at J.B. Hunt Transport Services.

The ruling came as J.B. Hunt was already expanding its dedicated operations, the executive and colleagues told attendees of the Wells Fargo Industrials & Materials Conference.

J.B. Hunt ranks No. 3 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, No. 2 among truckload/dedicated players and No. 1 in the intermodal/drayage segment of the freight market.

The Montgomery ruling, along with regulatory initiatives expected to cut carrier capacity, is set to boost J.B. Hunt’s dedicated operations, Executive Vice President of Sales and Marketing Spencer Frazier said at the conference June 9.

The ruling would encourage shippers to make sure they had the safest people managing and mitigating risk and also creating value, Frazier added.

In the Montgomery decision, the Supreme Court decided that a truck driver who was seriously injured when his parked tractor was hit by another tractor could proceed with a lawsuit against the brokerage that executed the load.

Shawn Montgomery, the driver, sued Caribe Transport II as well as C.H. Robinson, arguing the brokerage should share liability because it hired the carrier despite being aware of multiple crashes involving the driver and the Pennsylvania-based hauler.

Two members of the high court noted in a concurring statement that the decision could increase insurance costs for freight brokers, while market observers in the past month have said it would add to the ongoing capacity constraints by keeping high-risk drivers and carriers out of the market over liability fears.

J.B. Hunt has little to worry about, executives said at the Wells Fargo conference. The company ranks No. 4 on the TT Top 100 list of the largest logistics companies and No. 3 among freight brokers.

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Dietrich 

“We consider ourselves above the industry normally from a carrier-vetting standpoint. We don’t use conditional carriers and we don’t tender loads to them, and a carrier has to have been in service for at least a year before we tender loads there,” said Senior Vice President of Intermodal Operations Bill Dietrich.

Dedicated contract carriage is intended to offer shippers greater stability, especially compared with the spot truckload market.

Lowell, Ark.-based J.B. Hunt’s dedicated operations were already growing.

“Our dedicated business has had probably one of the most impressive runs on double-digit returns. I believe it’s over 10 years, and that portfolio continues to get stronger,” Frazier said. “ Our pipeline is significant. We’ve got a goal of growing 800 to 1,000 trucks again this year. That pipeline is increasing.”

J.B. Hunt seeks to replace private fleets as a dedicated carrier, and the Montgomery ruling will aid the carrier’s cause there, too.

Managing risk and brand is part of the proposition to potential customers, said Frazier, adding that J.B. Hunt’s safety is currently as good as it has ever been.

“And that’s something that really a private fleet, if you don’t have the talent and the technology, it’s very hard for them to keep up with the challenges of safety and then investing in equipment,” he told conference attendees.

In another boost for the company, a rival truckload carrier told attendees that rate strength was beginning to show up more clearly in dedicated contract renewals.

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Wikoff 

“[Dedicated] may not have the slope and pace of what we’re seeing in one way, whether that be in one-way spot or one-way contract, but there is momentum there. We are seeing those increases; that’s going to be gradual,” Werner Enterprises Chief Financial Officer Chris Wikoff said.

J.B. Hunt and Werner are not the only Top 20 for-hire carriers eyeing dedicated truckload growth, with Schneider executives telling conference attendees its enthusiasm for an acquisition was growing. Schneider ranks No. 10 on the for-hire TT100 and No. 7 among truckload/dedicated carriers.

Werner in January acquired privately owned dedicated carrier FirstFleet and associated real estate for a combined $282.8 million. The carrier said at the time the deal would position the combined company as the fifth-largest dedicated carrier in the country by power units and would raise its dedicated revenue by about 50%.

Omaha, Neb.-based Werner ranked No. 18 on the for-hire TT100 before January’s deal as well as No. 8 among truckload/dedicated carriers. FirstFleet ranked No. 67 on the for-hire TT100 and No. 16 in the truckload/dedicated segment of the market.