Western Railroad Discussion > J B Hunt and BNSF Arbitration

I am posting this info hoping someone might have knowledge of the contract between J B Hunt and BNSF as I find them entering arbitration over intermodal revenue sharing in which they split revenue on loads tendered to the BNSF interesting as one would think the contract would be on a per load basis with volume guarantees providing discounts. 

The compainies had a similar arbitrration in 2004 in which JB Hunt ended up paying $16.5 million to BNSF

Any input would be appreciated

Dale Smith

This seems to occur every few years as an outside arbitrator looks at the agreement and determines if the revenue sharing is fair,
​goes back to that original deal with JB Hunt and Mike Haverty.

http://www.wsj.com/articles/bnsf-j-b-hunt-head-to-arbitration-1483565636

gmojim



Edited 1 time(s). Last edit at 01/05/17 14:31 by gmojim.

The companies then split the proceeds, in an arrangement dating back more than 25 years that is widely credited with vaulting intermodal services from a niche business to a $15 billion-a-year industry in the U.S., according to Stephens Inc.

It was a one of a kind deal at the time, a handshake with Hunt and Haverty.

​gmojim

More, note Mike Haverty's comment at the bottom of this piece,

http://www.arkansasonline.com/news/2017/jan/04/j-b-hunt-bnsf-will-review-revenue-split/?f=business

gmojim
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​Posted below the complete text of the above article from arkansasonline.com as the link to the article may not be available months from now and is a good reference on one of the most important events in railroad intermodal history.

----------The original 1991 contract was the first successful implementation of intermodal transportation. Since then, the strategy of moving freight between modes to maximize rail's long-haul efficiency and trucking's short-haul capabilities has completely altered freight transport.Last year, about $3.7 billion -- 60 percent of J.B. Hunt's revenue -- came from its intermodal segment. Michael Haverty, who was the president of Santa Fe Railway when he approached J.B. Hunt with the original intermodal deal in 1989, has estimated that BNSF makes about $1 billion annually from the deal. Santa Fe Railway Corp. and Burlington Northern Inc. merged to form BNSF in 1993.The "evergreen" intermodal contract automatically renews each year. The agreement stipulates that the revenue division will be negotiated by the two companies and is reviewed quarterly. J.B. Hunt is questioning the period beginning May 1, 2016.The agreement was previously taken to arbitration in 2004 by BNSF. J.B. Hunt had to pay $16.5 million as a result.In the release, J.B. Hunt noted that the "fairness of the revenue division" had not been evaluated by a third party since that last arbitration. Company officials pointed to the "tremendous growth" of the intermodal network and "increased operating complexities" as the reason to do so now.J.B. Hunt did not respond to further requests for comment but stated in the release that though the process "may be lengthy and time consuming," the company "considers this part of the normal course of business within the long term relationship.""I think an arbitrator will settle the disagreement, and they will move on and work together," Haverty said. "The business relationship is too important to both parties, and it has survived 26 years. So I cannot imagine this having a material affect on either the relationship or the financials of either party.
"By Emma Hurt   This article was published January 4, 2017 at 2:04 a.m



Edited 5 time(s). Last edit at 01/08/17 18:09 by gmojim.