A key metric in a trucking giant's financial statements shows that surging demand amid coronavirus doesn't mean increased profit for truckers

  • The trucking industry was poised to rake in cash as the coronavirus spurred customers to panic buy.
  • But the earnings of industry bellwether J.B. Hunt shows that more revenue hasn't translated to more profits.
  • The split in revenue and profits points to a common problem in the freight world -- more customers and more boxes to move doesn't necessarily translate to more money.
  • The chaotic effect the coronavirus had on supply chains is further dragging down profits. 
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In recent weeks, the coronavirus has upended America's £800 billion trucking industry. Typical manufacturing supply chains have all but dried up, while the pressure to move more retail and medical goods have heated up.

In March 2020, overall trucking volumes jumped by 32% compared to the same month last year, according to freight data and media company FreightWaves. The demand forced the federal government to lift a safety law that dictates how many hours a truck driver can work for the first time ever. That volatility has manifested in the earnings of Lowell, Arkansas-based J.B.

Hunt. In the first quarter of 2020, which spanned from January to March, J.B. Hunt's revenue rose by 9.2% compared to the first quarter of 2019.

But, over that same period, operating income fell by 7.8%. J.B. Hunt is the No.

4 largest trucking company in the US, with 20,835 drivers. The company did not immediately respond to Business Insider's request for a comment.  As The Wall Street Journal's Jennifer Smith reported last month, the trucking industry has had to reorganize so much of its freight flows as a result of the coronavirus that the boom in business doesn't necessarily mean truckers will make bank from it.

Margins in the industry were already notoriously low because of tremendous competition among some 206,000 companies. The upheaval in freight flows drove DAT analyst Peggy Dorf to call the coronavirus pandemic "the mother of all supply chain disruptions" in a blog last month.

Virus aside, more freight doesn't always mean more cash

The dip was most marked in final mile services, a division that's angled at capitalizing on consumers' fervor to buy big things like mattresses, washing machines, and exercise equipment online. J.B.

Hunt saw a 39% boost in revenues in its final-mile sector, but ultimately lost £3.3 million on the £153 million business. J.B. Hunt has invested significantly in recent years into its final-mile network, which accounted for 7% of its overall revenue last quarter.

Intermodal and dedicated trucking services remain J.B. Hunt's largest business. The split in revenue and profits points to a common problem in the freight world -- more customers and more boxes to move doesn't necessarily translate to more money.

Parcel giant FedEx fell victim to the trap last year, though the company has shifted away from moving e-commerce packages for Amazon (notorious for high volume and low margins) to curating its own group of online retailers, like Walmart.  And then there are the trucking companies that mostly work in the manufacturing space, which has essentially vanished as factories close. While big players like J.B.

Hunt are nimble enough to compensate for the shuttering of such factories, small companies are set to bleed out or go bankrupt.  J.B. Hunt announced earnings after market close on April 14. The company is the typically the first among US truckers to announce earnings every quarter.

Because of that, and its status in the industry as one of the best-run trucking companies, J.B.

Hunt is seen as an industry bellwether.

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