Morningstar | Tight Truckload-Market Capacity Proving a Major 2018 Tailwind for Hub's Logistics Operations
Hub Group is the second-largest intermodal marketing company and ranks in the top 20 asset-light highway brokers by gross revenue. In its flagship intermodal unit, Hub contracts with the Class I railroads for the line-haul movement of its owned/leased containers. It operates the second-largest fleet in the industry, with exclusive access to more than 30,000 containers, and enjoys an approximate 13% market share. By gross revenue, J.B. Hunt is the largest intermodal marketing company, followed by Hub and the intermodal divisions of XPO Logistics and Schneider National.We think Hub has developed networks of sufficient scale to be attractive to customers (shippers) and suppliers, both of which benefit from using a larger intermediary. Sophisticated IT systems and market know-how enable customers to outsource intermodal shipping to an expert specialist, while Hub's large volume of loads and significant control of containers make it an attractive customer to the Class I railroads. The company's primary rail carriers are Norfolk Southern in East and Union Pacific in the West. Low diesel fuel prices and depressed truckload pricing tempered intermodal's discount to trucking throughout 2016 and 2017. But truckload capacity firmed late last year on accelerating demand, and conditions will remain tight for the rest of 2018 on the back of widespread adoption of electronic logging devices and the driver shortage. Throughout 2018, shippers have reignited their pursuit of multimodal options, which is reviving truck-to-rail conversion activity, particularly in Eastern U.S. corridors, where several Class I railroads have boosted their service capabilities over the past decade. Overall, favorable trends should support 3%-4% industry container volume growth longer term.Hub Group is a supply chain management company that provides transportation and logistics solutions. Through its network, the company arranges for the movement of freight in and out of every main city in the U.S., Canada and Mexico. The company's lines of business include: intermodal, which arranges for the movement of its customers' freight in containers and trailers; dedicated trucking, which provides a dedicated fleet of equipment and drivers to each customer; trust brokerage, which operates truck brokerage operations in the U.S.; and logistics, which provides a range of transportation management services and technology solutions, and delivers supply chain services to consumer-packaged goods clients.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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