Freight brokerages struggle through a long trough

The freight winter that sent Surge into bankruptcy and shut down Convoy isn’t over yet, even if the bottom is likely in. Tender rejection rates are hovering around 4%, indicating that capacity is still loose and that asset-based carriers aren’t in a position to reject contracted freight.

J.B. Hunt’s first-quarter results, reported Tuesday after markets closed, revealed the pain felt by the largest transportation providers and their brokerages. Integrated Capacity Solutions (ICS), Hunt’s brokerage, said that gross revenues were down 26% year over year to $285 million on 22% fewer loads and 5% lower revenue per load; the operation as a whole is now smaller than it was five years ago, in the first quarter of 2019, when it posted gross revenue of $301 million.

Hunt has invested in improving the online marketplace that powers most of ICS’ transactions, J.B. Hunt Carrier 360, by removing sketchy carriers and covering more loads manually to avoid fraud and bad actors. But gross margins actually widened to 14.3% compared to 13.4% in the first quarter of 2023. ICS ended up burning $17.5 million, but $11 million of that was due to integration costs related to Hunt’s acquisition of BNSF Logistics, a freight brokerage that accounts for approximately $70 million of ICS’ gross revenues.

Wall Street wasn’t happy; Hunt’s share price is down more than 8% since it announced its first-quarter results.

Source: freightwaves.com