Can you put a price on friendship? In the case of BNSF and its biggest intermodal partner, that would be $100 million the railroad in an extended dispute says it is owed.
The Class I and JB Hunt Transport Services since January 2017 have been locked in arbitration, the Wall Street Journal reported, over how they split intermodal revenue.
The business relationship between the transportation giants dates to 1990. How they divide intermodal revenue and charges from as far back as 2014 is at the heart of the disagreement, which was revealed in recent filings with the Securities and Exchange Commission. It’s the second time the companies have sought arbitration.
The railroad hauls 62% of Hunt’s intermodal loads, according to analysts’ estimates. Intermodal is Hunt’s largest division, totaling revenue of $4.08 billion in 2017, or 57% of the carrier’s total.
Hunt in its 3Q report noted that a confidential interim award from an arbitration panel would hit its pre-tax earnings by $18.3 million.
After the award in October, BNSF released this statement:
“While there are still matters to be finalized by the panel, BNSF is pleased with the decision which, when final, should result in favorable revenue division adjustments to BNSF for historic periods and going forward, resulting in payments to BNSF and improving the efficiency of our joint service product. With the key issues resolved, BNSF looks forward to working with JBHT to finalize the award and implement its directives.”
JB Hunt executives did not comment on the report during the earnings call with analysts.
The Journal cited a BNSF securities filing that it has provided JB Hunt with calculations for payments due “in excess of $100 million, consisting of additional revenue owed BNSF for 2016 and 2017 and certain charges…for specific services for customers from April 2014 through May 2018.”
Hunt, in a separate filing, said that it would submit its calculation of the adjusted revenue for that period to the arbitration panel, which “may then issue an additional interim award as appropriate.”