There are a lot of things we could start with. I guess, the first thing we're going to start with is a presentation, albeit a brief one, that management's put together. I'm going to hand things over, I guess, to either Andrew or Brad. Thank you.
Thank you, Dan, and thank you, Baird. This is always a great event for us. One of the few conferences where we actually just take a few minutes to go through a slide just because this is more of a generalist or industrial company, and so we see a broader group of investors and just sort of want to remind everybody about the J.B. Hunt story. Forward-looking statements is up here, obviously. Risk factors are in our filings, and please, invite you to look at those. Just real high level, our vision is to create the most efficient transportation network in North America. I really want to emphasize that we set out to accomplish both our vision and mission by focusing on our company foundations. We say PTC, it's people, technology, and capacity.
It's very intentional that our people come first, whether you're working in the office, whether you're in the maintenance shop, whether you're behind the wheel driving our trucks. We truly think about putting our people first. If you take care of your people and they take care of your customers, we think ultimately shareholders will be well taken care of, and I think that's been a secret recipe to our long-term success and long-term growth. We think technology is an enabler to allow us to best utilize our capacity to serve our customers. Our foundations are very important to us. Our mission, we want to drive long-term value for our people, our customers, and our shareholders. We do this, and I just want to highlight, you can see our values.
Safety continues to be a very important priority for our company. We have changed, for our bonus-eligible employees, safety is a component of how we are compensated. In light of some of the trends we've seen in the industry, we think safety is important because there's a true cost to not being safe. We continue to make improvements, and so we're, knock on wood, on year four of improving our DOT preventable accidents per million miles. In light of the growth, the new hires, and all the pressure we're seeing in the transportation industry, I think we're very proud of our safety performance.
Just real quick at a glance, I think the only thing that I'll mention here is we do have over 33,000 employees. We are a large organization. We feel like scale is one of the advantages we have across our five business segments. In terms of when we entered 2026, what were our priorities? One was to focus on disciplined growth through operational excellence. We think that is a key precursor to being able to go to our customers, creating value for them, and making sure we are getting appropriately paid. Dan, I am sure we will be talking about that some here.
We want to leverage our investments in our people, technology, and capacity. I would say we remain very focused on repairing our margins. I think one of the more recent updates, particularly as we have gotten questions about 2027, in light of what the market is presenting in terms of opportunities, you will probably see repair margins be a higher. Well, move up on the priority list as you see it being displayed here in 2027. This is one of my favorite slides, really just because I think it speaks to our company's culture.
When you look at our 13 Section 16 officers, and they have 360 years of experience, not in the industry, but at J.B. Hunt, I think it says a lot about our company and our founder, Mr. and Mrs. Hunt. Dan, I think you should point out, clearly I bring down the batting average on that list at seven years, but hopefully I can continue to add to that number going forward.
Some things can go without being said.
Thanks, Dan. Just want to make clear, we primarily have an organic growth strategy. We are not very acquisitive. We do like buying back our stock, and we feel like we have been opportunistic over the years, but we have large addressable markets to grow into. This is a new slide, and I really wanted to just include this because I think this can come up in some of our discussion here. What is really unique about where we are in what we will call this cycle? I think to put things into perspective, this is a weekly chart about what J.B. Hunt sees as a driver need, and that's driver needs for all five of our.
That's a driver need for dedicated, intermodal, final mile, and it is compared to the Cass Freight Index in terms of what's going on with freight volume or freight demand in the industry. During COVID, you could see how elevated our driver need was by the gray bars, but you could also see freight demand was also elevated. What I think is interesting is, here you sit today, our driver need is at or even at some point reached above COVID levels, but you see freight demand is not that robust. I think the reason why we're seeing this, and particularly relative to the growth we've been experiencing is, as you saw on a prior slide, we have been focused on operational excellence.
We have been on record to say we don't believe that the freight market or demand, or the economy is robust or on fire, but we feel like in light of the supply-driven catalysts that we've seen, particularly on the regulatory side. We're seeing outsized demand for our service in light of what we think has been happening on the supply side, which to me means, to the extent demand is a future catalyst, would probably just add to the discrepancy we're seeing sort of displayed here in this chart.
Dan, I'll end here. I think we've been disciplined on our cost. We've talked about this. We announced in the second quarter of 2025 removing $100 million of structural costs from our business. I think we've been very successful in that. I think one point I want to land here is we've also been very disciplined in terms of how we deployed our capital. You can see in 2025, we bought back a record dollar amount of our stock, $923 million , which I thought was very timely. We continue to be opportunistic in returning value to shareholders. We're on our 22nd year in a row of raising our dividend. While remaining disciplined on cost, we'll also remain very disciplined on how we allocate our capital.
That was great. Thank you. That context is always really helpful. Hunt's got a lot of moving pieces to it, right? When I kind of peel the layers a little bit here and think about where we started the year and where we find ourselves today, I think it's to some extent very different narratives. I think we started the year as investors, rightly or wrongly, with primarily a cost-to-serve initiative that was front and center, very present in the discussion. Then as we got into the year and spot rates started to accelerate, and as we got into a conflict, obviously with Iran, fuel prices went up. That really, I think, along with Montgomery, certainly did a lot to shape the backdrop and really accelerate the supply narrative in a way that nothing else really could.
Intermodal and dedicated are both unique assets because they offer a form of hedge in a market environment where spot rates are going up, where fuel prices are going up. Maybe if we could just start with cost-to-serve, maybe to frame that, where we are in the evolution of that initiative. I would say you're more in a growth mode today than you certainly were this time a year ago. Maybe if we could start there.
Yeah, I would say on our cost-to-serve initiative, like I just previously mentioned, we wanted to cut out $100 million of structural cost. I think the last update we gave was after our second quarter and said on an annual basis, we had cut out $135 million. Feel very confident about that cost removal being very visible to our investors because investors saw margin improvement in an environment where there was not a lot of price, or if we had price, it was very minimal, particularly relative to what inflationary cost pressures we as an industry had been seeing. But cost-to-serve wasn't a one-year initiative.
It is an ongoing initiative for us, and I would say Andrew is doing a great job helping to lead us in all areas of our business to just think through and challenge how can we drive improvement and not just cost as a percentage of revenue, because you can sort of get lulled to sleep when rate comes your way. How do we remain very disciplined on cost metrics? That's been an initiative that continues to be ongoing. We're obviously in budget season and thinking through what the cost of growth will look like for us next year.
To us, as we mentioned, one of our priorities is leveraging our investments in PTC. So how do we leverage the investments we've made? That would be driving improvements in all these cost metrics. So, ongoing initiative.
Darren, I do not know if there is anything you would want to add to that.
No, I just think that the lowering our cost-to-serve initiative was also focused on the recognition that our margins were not where we wanted them to be, yet we want to be a growth trajectory, and the need for us to lower our cost at that time to be more competitive, yet also show both ourselves, our investors, our customers that we understand how critical it is that we create a cost platform that allows us to compete. That was very important to us. To your point, Dan, I mean, coming into the year, I think that the efforts from our lowering our cost-to-serve initiative did show up in the form of growth. But we had awareness to regulatory changes that was going to take capacity out, and we felt like there might be a stronger pricing opportunity as the year went on.
That ultimately has played itself out to where today, when we look at new inflationary costs in order to accommodate growth, the challenge for hiring drivers and pressure on driver wage is real. That is something that has armed us with a good way to talk to our customers about how are we going to continue to grow and how can we solve their capacity needs on the backbone of operational excellence, which really positioned us well coming in to this point of the year and the next bid cycle.
Right. Now, that kind of leads me to the next question I wanted to ask, and it may be more than just a one-question question. As we think about the path forward, it strikes me we are not really in a growth market in terms of overall freight demand, and yet- Your core businesses are very much front and center growth. With that kind of being the backdrop, at the same time, you have the opportunity to take price going forward in a way that you could not maybe a year ago. Maybe if we could talk a little bit about the growth opportunities specifically with intermodal, since you are here, let us start there.
We can talk about dedicated. Dedicated, when I think about dedicated a year ago, it was in a very different spot. It seemed like it was I do not mean to suggest it is not a competitive market, it is, but it seems like the demand for dedicated has grown alongside this tighter driver market. Maybe to talk about the growth in intermodal that has developed here over the last six to nine months.
Sure. I think that as our customers, I will even go back three or four years, is coming through the, what we called a freight recession, just a depressed freight market where oversupplied on capacity, and every year that that sort of scenario played out longer, I think it caught both us and our customers, frankly, by surprise that it lasted that long. We were experiencing highway-to-rail conversion with our customers as they were beginning to hedge against a future state when truckload rates would climb.
Here we are, yes, it took three or four years to get to that point, but the growth trajectory for highway-to-rail conversion has existed for a long time now in that, really, customers were looking for a consistency in the service, and they began to trust it again. We knew that coming out of the pandemic, we had to rebuild confidence for our customers in what intermodal's capabilities were. I believe the rail providers across the board have been very committed to intermodal as a growth engine in their organizations, and the service product and the consistency that we have been able to show really highlighted that.
It is just armed us to be focused on disciplined growth. By that I mean, we have opportunities in front of us today to go grow in lanes that I would not consider to be as sustainable as more traditional intermodal lanes. The best example I could give is maybe Columbus to Atlanta is kind of a new market that we have a number of customers asking us for intermodal answers. CSX can perform in that lane, and they're a willing partner to do that. I do think that from a pricing perspective, the ability to sustain an advantage for intermodal against highway, it's a little harder to see over the long term in a lane like that.
We've been very focused at onboarding our growth opportunities in the traditional intermodal lanes that we know we have a long-term sustainable advantage against truckload rates, even in a future when truck pricing could come back to earth, if you will. If there is a future state when spot prices begin to decline, or maybe there is a new entrance of capacity and more capacity grows, will there be pricing pressure on the truckload market?
We want to make sure intermodal has a sustainable program so that we can continue to offer value, and that gap against the highway price has to be something that we can sustain, and that's been a big part of our focus on growth.
Spreads have been a really important piece of that growth opportunity. I suspect that spread narrative is also going to be an important piece to pricing as we look out to 2027. I know there are sensitivities around price always, but it's an important question, I think, that I'd like to frame for you here a little bit. We struggle to imagine an environment where truck rates don't continue to go up in 2027 simply because there's been no margin repair in the industry, and the driver market remains a highly constrained one. In a world where rates maybe don't go up at the same pace that they did last year, but are nonetheless positive, that's another tailwind. It's another year where intermodal can take share.
How do you manage, how do you balance the desire to grow with disciplined growth and the need to get paid for the value you're providing customers?
Well, I think you heard Brad highlight it that we have survived what we called the freight recession with growing our business underlying volumes and finding a way to earn confidence out of customers in the service quality we provided. I think as we move into the next chapter, repairing our margins is the top priority. Will we fully close the gap between truckload pricing and intermodal? I don't have any idea today. I know that as we talk to our customers about our cost challenges and positions that we have today with the need to hire drivers, a market with more expensive equipment for us to purchase in order to grow with, we're certainly talking to our customers about improving the return profile so that it justifies those reinvestments.
We're in a spot where I believe that the market will support pricing ahead of inflation. But, hey, we faced some challenges in the third quarter related to driver onboarding. I think that we've come a long way already this year in recovering or understanding that cost and the magnitude of the pricing need in order to get to that point of repairing margins. But I'm very confident that our pricing discussions and the pathway we're on has us repairing our margin. I'm going to say I'm a little less confident that we're going to close the gap to truckload pricing because I don't know what truckload pricing is going to do. I would agree that it feels like it will continue to climb from here, but we don't know that for sure.
I know that the value proposition we show to our customers has never been stronger with our intermodal product. We're very confident in our ability to serve customers, continue to grow, and we think we can get paid appropriately for that.
Right. Well, I mean, you guys deliver service like nobody else, and there's really no question about that. You deserve to get paid for it too. Maybe last question or two here on intermodal, just differentiating the West versus the East, which I think has been an important narrative to kind of understand. Then, a question I've been trying to think through, really for next year is this premise that if we see continued double-digit growth in volume, at what point does the market inherently become highly constrained, whether through drivers, whether through containers, whether it be through rail assets, or yards? Rails don't typically do well with double-digit growth for multiple years in a row. So, last two there.
Well, I think on the growth trajectory and rail communication, that comes down to how good a job our customers and we do together to communicate to the railroads about expectations. I think the rail system can accommodate really strong growth for a long period of time. What doesn't work well with our rail providers is to surprise them with double-digit growth that we didn't tell them was coming. When we have good visibility to it, when we can talk about the trajectory and the success we're on, I do have a lot of confidence in the ability of the industry to accommodate that growth.
As it relates to equipment, we've long talked about the container capacity that shows up in our financials. I think recently it's somewhere just under 125,000 containers on our balance or on what we show in terms of active containers. We own more than that. As we convert that business or those containers to fit our chassis, we have really strong growth available as we move into next year. We are nearing a point at which it's time to really consider investing and buying and adding to our intermodal capacity. I think it's very important that we show an improvement in our margin profile before we start reinvesting in additional assets. We know that, our investors expect that, and they should. We expect it, and we're very confident about where we're at there.
East to West, the one thing I would say is Eastern Network has always been really the 7 million- 11 million loads that we've talked about in the past as being highway-to-rail convertible business that we see for about a decade now inside our pricing systems. We price about $120 billion worth of business every year. The vast majority of that shows up in the Eastern Network. Now, when you hear Eastern Network, don't assume that's just Norfolk Southern and CSX Eastern Network. Our definition would include lanes like Texas to Chicago, Denver to Chicago, Mexico business that doesn't touch the West Coast. We lump all of that into our Eastern Network.
When you see an 18% growth out of us in the Eastern Network in the third quarter versus 1% transcon, I don't want anybody to believe we're only growing on BNSF at 1%. We're doing better than that and continue to see the strongest opportunities for highway-to-rail conversion in the East. Out West, it's so much more dependent on import economy, what's happening with the way shippers are planning for all water routes, and then what happens in the economics of the intact international intermodal. That's where we've shown the most discipline.
We've had opportunities to grow faster in transcon, but when we asked customers to help fund the imbalance of the Western Network, we weren't as successful, and we were at a point where we asked for a price in order to produce the capacity on the West Coast. In some cases, customers said yes, and in some cases, they found alternatives to what we do.
All great context. I appreciate that. Maybe to use that as an opportunity to pivot dedicated. The dedicated market, as I kind of implied earlier, I think it's seen a lot of change. The driver market itself, spot rates, and I think most shippers are taking the view that there's a lot of rate repair that needs to occur over the road to begin to earn an acceptable return, and so more inflation probably on the way. Your pipeline has shown a lot of net adds here last quarter. I suspect that'll probably continue.
Some of the wage growth that was necessary last quarter was certainly a function of the growth in dedicated. Can you frame for us how we should be thinking about growth in dedicated moving forward in light of the wage increases that were required to facilitate that growth? Ultimately, I know you guys don't provide guidance, but how should we think about historical returns in light of current returns in that business?
Yeah. Well, the one thing I want to maybe start with what you said there at the end. When we think about our dedicated business, we think of it almost should be thought of as like mini acquisitions. Our goal is to go to customers and look at converting what is their assets, their employees, their private fleet into something that they're outsourcing. You kind of hit on a couple of these to start. A reason why one of our potential customers might consider outsourcing their private fleet is, "Hey, this is my core business. I have capital constraints. I have trucks and trailers that need to be replaced, but I really have a factory or bakery or something where I want to deploy capital that is my core business. So I'd rather outsource this for that reason," right?
In terms of prioritizing their capital. They may see, "Hey, we don't really have a really core safety program around how we operate our equipment, and so it maybe make more sense for us to outsource the risk of driving trucks as we've seen the cost of risk continue to go up for our industry." Then, of course, we hire a lot of drivers. We have a very strong brand in the market in terms of the quality of our driving jobs. I think our ability to hire and attract drivers is very different than a company or a business that hiring drivers may not be core to what they do. Those are all the reasons why a customer will make a decision on why they want to outsource to us.
All of those, I think, are driving a lot of opportunities into our sales channels in terms of how we vet. We go through very specific engineered design requests using customer data and how we would optimize the flow of their freight, and then we price it. Our pricing model is, and really, if you think about how the executive long-term incentive is structured, we price to ROIC. So return on invested capital has always been our North Star. It certainly is in dedicated, and so every deal that we're underwriting, we're underwriting to a return on invested capital threshold.
We don't talk about it a lot, but in light of having such a large pipeline, our success rate and our win rate, believe it or not, is quite low. You're probably wondering, "Why are you on stage admitting that in front of a whole room of investors?" I think the reason why I want to say that is I think it speaks to the discipline in terms of what opportunities we see and making sure we are staying true to our return thresholds when it comes to dedicated. So, demand is very strong. I'm not going to give any guidance as to what I think growth can look like, but guidance we have provided is we think net growth should be 800 to 1,000 trucks per year.
We are in an environment, we sold 400 something trucks, 425 trucks last quarter. We're on a pace where we're gaining momentum and we're on an annualized rate to be north of that. I do think we have momentum there. That will drive more capital into that business next year. As investors, you should expect us to be deploying more capital into dedicated, but I would just remind you, when we deploy capital there, it is success-based. It generally comes with a five-year contract, has fixed and annual components to how we get paid. It has annual price escalators linked to ECI, CPI and we typically have very high renewals when that contract comes up at the end of the five years.
Really excited about obviously momentum in intermodal, and when Darren, who's been at the company 32.5 years, says the value proposition of intermodal is the strongest he's seen in his career, plus pipeline we have in dedicated, and we have momentum in JBT and ICS. We are working through some things in final mile, but I would say when you look across our portfolio, we feel very good about how we are positioned for what is ahead.
We have run through time pretty quick here, and I apologize. I do not think we are going to have an opportunity to ask questions. I would just ask one more of you, if there are any thoughts or milestones or just things you want to leave with the audience as we close up here, any mile markers as we are thinking about the path forward?
I will just say, this management team has been around a long time. We have worked together for a long time. Always focused on how we drive long-term returns for our shareholders. I think that will continue to be our focus, and I think we have a lot of experience in terms of how we manage what is ahead.
Thank you so much.