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J.B. Hunt’s acquisition of Walmart’s intermodal fleet part of long-term agreement

Deal comes with volume commitments to intermodal provider

J.B. Hunt and Walmart will expand their intermodal partnership. (Photo: Jim Allen/FreightWaves)

J.B. Hunt Transport Services announced Thursday it has entered a long-term intermodal deal with Walmart that includes volume and capacity commitments. As part of the deal, J.B. Hunt will acquire Walmart’s intermodal assets.

The multiyear deal expands an existing relationship between the two Northwest Arkansas companies, with J.B. Hunt (NASDAQ: JBHT) buying Walmart’s (NYSE: WMT) intermodal containers and chassis. Neither the size of the fleets nor the purchase price was disclosed.

“Today’s announcement is a testament to the mutual trust and shared vision our companies have developed over time, and innovative arrangements like this one demonstrate J.B. Hunt’s disciplined approach to strategically allocating capital to advance our mission of driving long-term value for our people, customers and shareholders,” said Spencer Frazier, J.B. Hunt’s executive vice president of sales and marketing.

J.B. Hunt has made numerous investments in intermodal capacity in recent years.

Two years ago, the company announced plans to expand its container fleet to 150,000 units, or 40%, by 2025 to 2027. It has also been investing in transloading facilities near some of the nation’s largest ports.

J.B. Hunt further aligned with rail partner BNSF Railway (NYSE: BRK-B) in November by launching Quantum, a premium intermodal service focused on converting highway freight to rail by emphasizing quicker and more consistent delivery times. The companies also have a new cross-border service in place in and out of Mexico, and J.B. Hunt will benefit from the opening of BNSF’s Barstow International Gateway, which will serve the ports in Southern California.

“Walmart’s long history of working with J.B. Hunt has many milestones of innovation and growth,” said Fernando Cortes, Walmart’s senior vice president of transportation. “This agreement will strengthen our commitment to delivering goods at an everyday low cost to our customers and members.”

Deutsche Bank (NYSE: DB) analyst Amit Mehrotra said the deal is unlikely to burden the intermodal market with excess capacity at a time when freight markets are still weak.

“We think the investment by JBHT is significant, but it’s part of the company’s existing commitment to get to 150k containers … and we note this purchase would represent capacity that is already in the market and comes with incremental volume commitments,” Mehrotra said in a Thursday note to clients.

“The true test is Intermodal volume and profit growth over the mid to long term. But this announcement appears to set the company up very well when the next upcycle comes, allowing it to continue increasing earnings power cycle over cycle.”

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.