J.B. Hunt Execs Optimistic Capacity Balloon Is Deflating
Ongoing Weak Demand Hindering Impact of Decrease in Capacity
Key Takeaways:
- J.B. Hunt executives said on its Oct. 15 earnings call that tighter enforcement of driver licensing rules is accelerating capacity exits and could signal the end of the freight recession.
- The company linked recent spot rate increases to new regulations requiring in-person license renewals and English proficiency checks, which could remove up to 200,000 drivers from the market.
- J.B. Hunt reported third-quarter net income of $170.85 million, up from $152.07 million a year earlier, and said regulatory impacts on trucking capacity will be closely monitored.
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Senior executives at J.B. Hunt Transport Services are optimistic the pace of carrier capacity exits is accelerating and that a corresponding increase in rates is in the cards.
Speaking on the Lowell, Ark.-based carrier’s third-quarter earnings call after the market closed Oct. 15, the executives opined that spot rate increases over the past couple of weeks heralded the first steps toward greater capacity cuts and the possible end of the ongoing freight recession.
The spot rate increases, they said, correlated with the introduction of new regulations on non-domiciled commercial driver license holders renewing their licenses in person annually and English-language proficiency enforcement requirements.
“The reason you’ve seen spot rates up in the last couple of weeks — it’s been because of the enforcement activity,” Chief Operating Officer Nick Hobbs told analysts. “It’s just tightened it up, and so we’ve seen a little tightness in probably eight to 10 markets. And I think you can kind of follow the news around and see where [U.S. Immigration and Customs Enforcement] is active in big metropolitan areas.”
The total market broker-posted spot rate decreased just over 1 cent in the week that ended Oct. 10 after rising nearly 3 cents during the previous week, according to Truckstop.com and FTR Transportation Intelligence.
Rates were 1% higher than in the same 2024 week — the weakest comparison in nine weeks — and close to 8% below the five-year average for the week, they added.
“Truckload capacity continued to exit the market [in Q3], and the pace of exits is accelerating, but the soft demand environment is likely muting the market impact of capacity attrition. Outside of recent weeks, truckload spot rates remained under pressure in the quarter,” said Executive Vice President of Sales and Marketing Spencer Fraser.
“More recent regulatory developments and, more importantly, regulatory enforcement is having an impact on capacity,” Fraser said. “While this industry may have a ‘chicken little’ reputation when it comes to predicting capacity changes, the capacity bubble may be deflating as we speak.”
However, Fraser warned: “In the near term, customers will remain skeptical of any predicted change, only believing it when they experience it.”
In May 2019, there were 240,000 carriers and 2.6 million drivers, Jeff Tucker, CEO at freight brokerage Tucker Company Worldwide, told a recent conference. In May 2025, those numbers had risen to 320,000 carriers and 3.2 million drivers.
The Federal Motor Carrier Safety Administration estimates 200,000 drivers could be removed from the driver pool as a consequence of the CDL rule.
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Were such numbers to exit the market, Tucker told attendees of Council of Supply Chain Management Professionals’ Edge 2025 conference, it could lead to a capacity crisis not unlike those of 2003’s hours-of-service rule rewrite under George W. Bush and 2017’s electronic logging device mandate deadline.
While not going quite that far, Hobbs told investors the impact on the wider trucking industry — if not J.B. Hunt itself — would likely be substantial.
“While the ultimate impact on industry capacity is hard to pinpoint, we believe the recent developments on regulations and enforcement, when taken together, could have a noticeable impact on available industry capacity,” Hobbs said. “There have been some signs based on what we are seeing in our truck and brokerage operations that it could have a broader industry impact.”
Whether upcoming privately gathered data such as those released by the Logistics Managers’ Index — which are even more important with the federal government currently shut down — show capacity headed in the opposite direction to rates will be closely watched.
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The LMI’s Transportation Capacity Index decreased 2.2 points to 55.1 in September. Despite this decrease, the index is 5.1 points higher than a year ago. Any reading above 50 indicates an expansion; a reading below 50 indicates contraction.
J.B. Hunt ranks No. 3 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, No. 1 on the intermodal sector list and No. 2 in truckload/dedicated. The company also ranks No. 4 on the logistics TT100 and No. 2 among freight brokerages.
The carrier posted net income of $170.85 million in Q3 ($1.76 per diluted share), compared with $152.07 million ($1.49) in the year-ago period, as companywide cost-cutting initiatives bore fruit.
