Intermodal Load Growth Cushions Hub Group Q3 Profit Decline
[Stay on top of transportation news: Get TTNews in your inbox.]
Hub Group profit and revenue fell in the third quarter of 2024, but intermodal load growth mitigated the damage and the carrier’s top executive is becoming more optimistic about the freight environment.
Oak Brook, Ill.-based Hub Group posted net income of $23.6 million, or 39 cents per share, in Q3, compared with $30.5 million, 48 cents, in the same period a year earlier.
Hub Group revenue in Q3 totaled $987 million, a 3.7% decrease from $1.025 billion a year earlier.
The decrease was the result of lower revenue per load, including fuel and accessorial revenue by its intermodal and brokerage units, although this was partially offset by intermodal volume growth of 12% and contributions from the company’s beefed up final-mile unit.
Hub Group acquired Forward Air’s final-mile unit for about $262 million in December 2023. The unit has 45 locations and more than 640 employees.
The company said at the time the acquisition would drive a continued diversification into non-asset-based logistics services.
Hub Group ranks No. 14 on Transport Topics’ Top 100 list of the largest for-hire carriers in North America. The carrier ranks No. 2 in the intermodal and drayage segment of the freight market.
Revenue at the company’s Intermodal and Transportation Solutions division totaled $560 million in Q3, down 5.88% from $595 million in the prior year.
The company did not provide a breakdown of volume at the unit.
Hub Group’s intermodal operations comprise about 50,000 containers, including 900 refrigerated containers, and about 900 tractors.
In early October, Hub Group sought to bolster those operations by teaming up with Mexico City-based Easo in a cross-border and intermodal joint venture.
Hub Group said the combined entity would become the largest cross-border and intra-Mexico intermodal company as the partners target opportunities from increased U.S.-Mexico freight flows and nearshoring.
Founded in 1972, Easo specializes in intermodal, dedicated trucking, truckload and freight brokerage services.
Hub Group CEO Phil Yeager said in a statement that market conditions in the most recent quarter were challenging.
Looking forward, however, Yeager expressed confidence in the company’s prospects for the coming months during an Oct. 30 call with analysts.
“The broader North American transportation market is showing signs of recovery, with a pulled forward peak season, capacity exits, a resilient consumer and inventory replenishment,” Yeager said during the quarterly earnings call.
“Outside factors, such as the recent port strike and weather events, did not create significant or prolonged tightness,” he said. “However, we are anticipating a more constructive framework for the market due to continued strength and demand along with small carrier capacity exits and minimal growth in capital expenditures in the industry.”
These factors should lead to improved pricing, Yeager said, though the timing remains unclear.
McLeod Software CEO Tom McLeod explores the potential for artificial intelligence to boost efficiency and build resilience. Tune in above or by going to RoadSigns.ttnews.com.
Unlike some other truckload carrier executives, he expressed optimism about the earlier-than-usual peak season.
“We’re in the early part of bid season, and I think demand has been very strong through the third quarter and into the fourth quarter. It’s great to see a peak season really take hold as we kick off bids for 2025,” he said.
“We’re not anticipating as we go into bid season, the prices will be down. I think it’s unknown how much they’ll be up,” Yeager said. “We’re very focused on retaining our network-friendly business and then being prescriptive with our customers around areas where they can help us in enhancing asset productivity, enhancing driver productivity.
“We’ll reprice about 70% of our business in the first and second quarter, but we’re feeling very good about our positioning opportunities to convert volume.”
Want more news? Listen to today's daily briefing below or go here for more info:
