Hub Group expects a “transformational year” for the intermodal industry as Eastern rail network expansion boosts intermodal volumes, company officials said.
“There’s a tremendous opportunity for us to continue to grow volume through modal conversion in the local East,” Mark A. Yeager, vice chairman, president and COO told analysts during a conference call Thursday. “It’s probably a bigger opportunity than the system will ever be capable of handling,” he said.
Hub’s Eastern intermodal revenue increased 19 percent year-over-year in the fourth quarter, while transcontinental intermodal revenue rose 21 percent. Overall, the asset-light company’s intermodal revenue increased 23 percent to $419 million.
Those increases were based on solid gains in volume and pricing, Hub Group officials said. Total intermodal volume rose 16 percent in the fourth quarter, which Hub Group said marked the return of a “traditional” truckload peak shipping season.
“October was the largest (intermodal volume) month in Hub’s history,” said Chairman and CEO David P. Yeager. “In fact, demand remained quite strong through mid-December in all of our business lines but particularly in intermodal.”
Hub’s net profit increased 36 percent in the fourth quarter to $17 million, while total revenue leaped 59 percent to $763 million. After subtracting transportation costs, the asset-light intermodal operator’s net revenue was $83.8 million.
For the full year, Hub’s profit rose 34 percent to $58.2 million on a 50 percent increase in total revenue to $2.8 billion. After transportation costs, Hub’s net revenue was $312.5 million in 2011, a 46.4 percent increase from 2010.
Hub’s brokerage and logistics businesses grew in 2011, a year when Hub completed three acquisitions, including Exel Transportation Services, now known as Mode, a $717 million third-party logistics company formerly owned by Deutsche Post.
In the fourth quarter, brokerage revenue rose 3 percent to $82 million. Unyson Logistics revenue increased 27 percent to $76 million, Hub said. Mode had $195.2 million in quarterly revenue and $586.3 million in annual sales.