JBHT, §1A diff (2022 → 2023)

Risk Factors

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for a discussion of items, uncertainties, assumptions and risks associated with these statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our financial statements in accordance with U.S. generally accepted accounting principles requires us to make estimates and assumptions that impact the amounts reported in our Consolidated Financial Statements and accompanying notes. Therefore, the reported amounts of assets, liabilities, revenues, expenses and associated disclosures of contingent liabilities are affected by these estimates. We evaluate these estimates on an ongoing basis, utilizing historical experience, consultation with third parties and other methods considered reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recognized in the accounting period in which the facts that give rise to the revision become known. We consider our critical accounting policies and estimates to be those that require us to make more significant judgments and estimates when we prepare our financial statements and include the following:

Workers’Compensation and Accident Costs

We purchase insurance coverage for a portion of expenses related to employee injuries, vehicular collisions, accidents, and cargo damage. Certain insurance arrangements include a level of self-insurance (deductible) coverage applicable to each claim. We have umbrella policies to limit our exposure to catastrophic claim costs which may include certain coverage-layer-specific, aggregated reimbursement limits of covered excess claims. We are substantially self-insured for loss of and damage to our owned and leased revenue equipment.

The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates, and claim type. For 2021 through 2023, we were self-insured for $500,000 per occurrence as well as subject to coverage-layer-specific, aggregated reimbursement limits of covered excess claims for personal injury and property damage. We were fully insured for workers’ compensation claims for nearly all states. We have policies in place for 2024 with substantially the same terms as our 2023 policies for personal injury, property damage, workers’ compensation, and cargo loss or damage.

Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators, as well as legal, economic, and regulatory factors. Our safety and claims personnel work directly with representatives from the insurance companies to continually update the estimated cost of each claim. The ultimate cost of a claim develops over time as additional information regarding the nature, timing, and extent of damages claimed becomes available. Accordingly, we use an actuarial method to develop current claim information to derive an estimate of our ultimate personal injury and property damage claim liability. This process involves the use of expected loss rates, loss-development factors based on our historical claims experience, claim frequencies and severity, and contractual premium adjustment factors, if applicable. In doing so, the recorded liability considers future claims growth and provides a reserve for incurred-but-not-reported claims. We do not discount our estimated losses. At December 31, 2023, we had an accrual of approximately $523 million for estimated claims. A significant increase in the volume of claims or amount of settlements exceeding our coverage-layer specific, aggregated reimbursement limits could result in a significant increase in our estimated liability for claims in future periods. In addition, we record receivables for amounts expected to be reimbursed for payments made in excess of self-insurance levels on covered claims. At December 31, 2023, we have recorded $493 million of expected reimbursement for covered excess claims, other insurance deposits, and prepaid insurance premiums.

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Revenue Equipment

We operate a significant number of tractors, trucks, containers, chassis, and trailers in connection with our business. This equipment may be purchased or acquired under lease agreements. In addition, we may rent revenue equipment from various third parties under short-term rental arrangements. Purchased revenue equipment is depreciated on the straight-line method over the estimated useful life to an estimated salvage or trade-in value. We periodically review the useful lives and salvage values of our revenue equipment and evaluate our long-lived assets for impairment. We have not identified any impairment to our assets at December 31, 2023.

We have agreements with our primary tractor suppliers for residual or trade-in values for certain new equipment. We have utilized these trade-in values, as well as other operational information such as anticipated annual miles, in accounting for depreciation expense.

Revenue Recognition

We record revenues on the gross basis at amounts charged to our customers because we control and are primarily responsible for the fulfillment of promised services. Accordingly, we serve as a principal in the transaction. We invoice our customers, and we maintain discretion over pricing. Additionally, we are responsible for selection of third-party transportation providers to the extent used to satisfy customer freight requirements.

We recognize revenue from customer contracts based on relative transit time in each reporting period and as other performance obligations are provided, with related expenses recognized as incurred. Accordingly, a portion of the total revenue that will be billed to the customer is recognized in each reporting period based on the percentage of the freight pickup and delivery performance obligation that has been completed at the end of the reporting period.

Our trade accounts receivable includes accounts receivable reduced by an allowance for uncollectible accounts. Receivables are recorded at amounts billed to customers when loads are delivered or services are performed. The allowance for uncollectible accounts is calculated over the life of the underlying receivable and is based on historical experience; any known trends or uncertainties related to customer billing and account collectability; current economic conditions; and reasonable and supportable economic forecasts, each applied to segregated risk pools based on the business segment that generated the receivable. The adequacy of our allowance is reviewed quarterly.

Income Taxes

We account for income taxes under the liability method. Our deferred tax assets and liabilities represent items that will result in a tax deduction or taxable income in future years for which we have already recorded the related tax expense or benefit in our statement of earnings. Deferred tax accounts arise as a result of timing differences between when items are recognized in our Consolidated Financial Statements and when they are recognized in our tax returns. We assess the likelihood that deferred tax assets will be recovered from future taxable income or the reversal of temporary timing differences. To the extent we believe recovery does not meet the more likely than not threshold, a valuation allowance is established. To the extent we establish a valuation allowance, we include an expense as part of our income tax provision.

Significant judgment is required in determining and assessing the impact of complex tax laws and certain tax-related contingencies on our provision for income taxes. As part of our calculation of the provision for income taxes, we assess whether the benefits of our tax positions are at least more likely than not to be sustained upon audit based on the technical merits of the tax position. For tax positions that are not more likely than not to be sustained upon audit, we accrue the largest amount of the benefit that is not more likely than not to be sustained in our Consolidated Financial Statements. Such accruals require us to make estimates and judgments, whereby actual results could vary materially from these estimates. Further, a number of years may elapse before a particular matter for which we have established an accrual is audited and resolved. See Note 6, Income Taxes, in our Consolidated Financial Statements for a discussion of our current tax contingencies.

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RESULTS OF OPERATIONS

The following table sets forth items in our Consolidated Statements of Earnings as a percentage of operating revenues and the percentage increase or decrease of those items compared with the prior year.

Percentage of Percentage Change Operating Revenues Between Years 2023 2023 vs. 2022 ───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── Operating revenues 100.0 100.0 100.0 (13.4 21.7 Operating expenses: Rents and purchased transportation 45.8 49.9 53.0 (20.6 14.6 Salaries, wages and employee benefits 25.4 22.8 22.7 (3.4 22.1 Fuel and fuel taxes 5.9 6.3 4.4 (19.3 75.6 Depreciation and amortization 5.8 4.4 4.6 14.5 15.7 Operating supplies and expenses 4.0 3.4 3.0 1.4 36.1 Insurance and claims 2.5 2.1 1.4 (0.8 92.7 General and administrative expenses, net of asset dispositions 2.0 1.4 1.5 27.5 10.1 Operating taxes and licenses 0.6 0.5 0.5 9.9 14.8 Communication and utilities 0.3 0.2 0.3 15.4 5.3 Total operating expenses 92.3 91.0 91.4 (12.2 21.2 Operating income 7.7 9.0 8.6 (25.4 27.4 Net interest expense 0.4 0.4 0.4 16.2 9.7 Earnings before income taxes 7.3 8.6 8.2 (27.0 28.2 Income taxes 1.6 2.1 1.9 (33.8 30.6 Net earnings 5.7 6.5 6.3 (24.9 27.4

2023 Compared With 2022

Consolidated Operating Revenues

Our total consolidated operating revenues decreased 13.4% to $12.83 billion in 2023, compared to $14.81 billion in 2022. This decrease was primarily due to lower volume and revenue per load within ICS and JBI, decreased revenue per load within JBT, and decreased revenue and stop counts in FMS. Fuel surcharge revenues decreased 23.9% to $1.85 billion in 2023, compared to $2.43 billion in 2022. Revenues, excluding fuel surcharge revenues, decreased 11.3% from 2022.

Consolidated Operating Expenses

Our 2023 consolidated operating expenses decreased 12.2% from 2022, while year-over-year revenue decreased 13.4%, resulting in a 2023 operating ratio of 92.3% compared to 91.0% in 2022.

Rents and purchased transportation costs decreased 20.6% in 2023, primarily due to a decrease in rail and truck carrier purchased transportation rates within JBI, ICS and JBT segments and decreased JBI and ICS load volume, which decreased services provided by third-party rail and truck carriers during the current year. Salaries, wages and employee benefit costs decreased 3.4% in 2023 from 2022. This decrease was primarily related to a decrease in employee headcounts and lower incentive compensation, partially offset by increased base driver pay and office personnel compensation in 2023.

Fuel and fuel taxes expense decreased 19.3% in 2023 compared with 2022, due primarily to a decrease in the price of fuel during 2023 and decreased road miles. We have fuel surcharge programs in place with the majority of our customers. These programs typically involve a specified computation based on the change in national, regional, or local fuel prices. While these programs may address fuel cost changes as frequently as weekly, most also reflect a specified miles-per-gallon factor and require a certain minimum change in fuel costs to trigger a change in fuel surcharge revenue. As a result, some of these programs have a time lag between when fuel costs change and when this change is reflected in revenues. Due to these programs, this lag negatively impacts operating income in times of rapidly increasing fuel costs and positively impacts operating income when fuel costs decrease rapidly. It is not meaningful to compare the amount of fuel surcharge revenue or the change in fuel surcharge revenue between reporting periods to fuel and fuel taxes expense, or the change of fuel expense between periods, as a significant portion of fuel cost is included in our payments to railroads, dray carriers and other third parties. These payments are classified as purchased transportation expense.

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Depreciation and amortization expense increased 14.5% in 2023, primarily due to equipment purchases related to new DCS long-term customer contracts, the addition of trailing equipment within our JBI and JBT segments and increased truck and tractor trades.

Operating supplies and expenses increased 1.4% in 2023 compared with 2022, driven primarily by higher building and facilities maintenance costs, increased tolls expense, increased towing costs, and higher equipment maintenance costs compared to 2022. Insurance and claims expense decreased 0.8% in 2023, primarily due to lower reserve expense for claims subject to insurance coverage-layer-specific aggregated limits and lower claim volume, partially offset by increased cost per claim and higher insurance policy premium expense. General and administrative expenses increased 27.5% from 2022, primarily due to a decrease in net gains from sale or disposal of assets, higher building and yard rental expense, and higher software subscription expense, partially offset by lower advertising costs and decreased professional service expense. Net loss from sale or disposal of assets was $27.8 million in 2023, compared to a net gain from sale or disposal of assets of $25.4 million in 2022.

Net interest expense for 2023 increased by 16.2% compared with 2023, due to higher effective interest rates on our debt and an increase in our average debt balance. Income tax expense decreased 33.8% in 2023, due primarily to decreased taxable earnings in 2023 and the recording of a discrete benefit associated with the favorable settlement of an uncertain tax position which had been reserved in a prior period during the current year. Our effective income tax rate was 22.1% in 2023 and 24.4% in 2022.

Segments

We operated five business segments during 2023. The operation of each of these businesses is described in our Notes to Consolidated Financial Statements. The following tables summarize financial and operating data by segment:

Operating Revenue by Segment Years Ended December 31, (in millions) 2023 2022 2021 JBI $ 6,208 $ 7,022 $ 5,454 DCS 3,543 3,524 2,706 ICS 1,390 2,323 2,471 FMS 918 1,042 909 JBT 789 937 668 Total segment revenues 12,848 14,848 12,208 Intersegment eliminations (18 (34 (40 Total $ 12,830 $ 14,814 $ 12,168

Operating Income by Segment Years Ended December 31, (in millions) 2023 2022 2021 JBI $ 569 $ 800 $ 603 DCS 405 361 314 ICS (44 57 40 FMS 47 37 34 JBT 16 77 55 Total $ 993 $ 1,332 $ 1,046

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Operating Data by Segment

Years Ended December 31, 2023 2022 2021 ───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── JBI Loads 2,044,980 2,068,278 1,984,834 Average length of haul (miles) 1,673 1,665 1,684 Revenue per load $ 3,035 $ 3,395 $ 2,748 Average tractors during the period (1) 6,488 6,601 5,904 Tractors (end of period) 6,380 6,696 6,194 Trailing equipment (end of period) 118,171 115,150 104,973 Average effective trailing equipment usage 99,374 107,319 98,798 DCS Loads 4,274,677 4,508,864 4,138,889 Average length of haul (miles) 175 168 165 Revenue per truck per week (2) $ 5,184 $ 5,214 $ 4,687 Average trucks during the period (3) 13,290 13,131 11,230 Trucks (end of period) 13,252 13,374 12,306 Trailing equipment (end of period) 32,600 30,020 31,209 Average effective trailing equipment 32,408 31,350 30,150 ICS Loads 764,839 1,027,529 1,063,473 Revenue per load $ 1,818 $ 2,261 $ 2,324 Gross profit margin 13.4 14.6 11.5 Employee count (end of period) 861 958 953 Approximate number of third-party carriers (end of period) 122,100 156,400 136,400 Marketplace for J.B. Hunt 360 revenue (millions) $ 765.6 $ 1,521.1 $ 1,583.8 FMS Stops 4,596,715 5,636,432 6,677,186 Average trucks during the period (3) 1,540 1,814 1,520 JBT Loads 410,091 398,070 327,231 Revenue per load $ 1,925 $ 2,353 $ 2,042 Average length of haul 652 570 548 Tractors (end of period) Company-owned 27 147 165 Independent contractor 1,931 2,095 1,454 Total tractors 1,958 2,242 1,619 Trailers (end of period) 13,561 13,020 8,785 Average effective trailing equipment usage 13,000 10,611 7,123

(1) Includes company-owned and independent contractor tractors

(2) Using weighted workdays

(3) Includes company-owned, independent contractor, and customer-owned trucks

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JBI Segment

JBI segment revenue decreased 12% to $6.21 billion in 2023, from $7.02 billion in 2022. This decrease in revenue was primarily a result of an 11% decrease in revenue per load, which is the combination of changes in freight mix, customer rate changes, and fuel surcharge revenue and a 1% decrease in load volume. Eastern network load volumes decreased 2% and transcontinental loads remained flat compared to 2022. Revenue per load excluding fuel surcharges decreased 8% compared to 2022.

Operating income of the JBI segment decreased to $569 million in 2023, from $800 million in 2022. The decrease is primarily due to decreased revenue and an increase in loss on sale of equipment, together with higher driver and non-driver wages, insurance and claims expense, and increased network and equipment-related costs as a percentage of gross revenue, partially offset by lower rail and third-party dray purchased transportation expense. In addition, JBI incurred $16 million and $33 million in expense for the segment’s portion of the additional casualty claim reserves in 2023 and 2022, respectively.

DCS Segment

DCS segment revenue increased 1% to $3.54 billion in 2023, from $3.52 billion in 2022. Productivity, defined as revenue per truck per week, decreased 1% compared to 2022. Productivity excluding fuel surcharge revenue increased 3% from 2022. The increase in productivity excluding fuel surcharge revenue was primarily due to contractual index-based rate increases and improved utilization of equipment. Customer retention rates are approximately 93%.

Operating income of our DCS segment increased to $405 million in 2023, from $361 million in 2022. The increase is primarily due to the maturing of new long-term customer contracts, partially offset by higher driver and non-driver wages and benefits, an increase in loss on sale of equipment, higher insurance and claims expense, increased equipment-related costs, and increased bad debt expense when compared to 2022. In addition, DCS incurred $20 million and $27 million in expense for the segment’s portion of the additional casualty claim reserves in 2023 and 2022, respectively.

ICS Segment

ICS segment revenue decreased 40% to $1.39 billion in 2023, from $2.32 billion in 2022. Overall volumes decreased 26%, while revenue per load decreased 20% when compared to 2022, primarily due to lower contractual and spot customer rates and changes in customer freight mix when compared to 2022. The decrease in revenue was partially offset by the acquisition of the brokerage assets of BNSF Logistics, LLC (BNSFL) on September 30, 2023. Contractual business was 64% of the total load volume and 63% of the total revenue in 2023, compared to 48% of the total load volume and 50% of the total revenue in 2022.

Our ICS segment had an operating loss of $44 million in 2023 compared to operating income of $57 million in 2022. The decrease in operating income was primarily due to decreased revenue, lower gross profit margins, and integration costs related to the BNSFL acquisition, partially offset by lower personnel expenses and decreased technology cost during 2023. Gross profit margin decreased to 13.4% in the current year versus 14.6% in 2022. Approximately $766 million of ICS revenue for 2023 was executed through the Marketplace for J.B. Hunt 360 compared to $1.52 billion in 2022. ICS’s carrier base decreased 22% when compared to 2022, primarily due to changes in carrier qualification requirements. In addition, ICS incurred $10 million and $22 million in expense for the segment’s portion of the additional casualty claim reserves in 2023 and 2022, respectively.

FMS Segment

FMS segment revenue decreased 12% to $918 million in 2023 from $1.04 billion in 2022, primarily due to decreased customer demand and the effects of internal efforts to improve revenue quality across certain accounts, partially offset by improved revenue quality at underperforming accounts and the addition of multiple new customer contracts implemented over the past year.

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Operating income of our FMS segment increased to $47 million in 2023, from $37 million in 2022. The increase in operating income was primarily due to improvements in revenue quality, lower personnel expenses, lower bad debt expense, and overall cost management, partially offset by inflationary increases in facility rental expenses and increased technology costs. In addition, FMS incurred $3 million and $5 million in expense for the segment’s portion of the additional casualty claim reserves in 2023 and 2022, respectively.

JBT Segment

JBT segment revenue decreased 16% to $789 million in 2023, from $937 million in 2022. Excluding fuel surcharges, revenue for 2023 decreased 17% compared to 2022, primarily due to a 19% decrease in revenue excluding fuel surcharge revenue per load, partially offset by a 3% increase in load volume compared to 2022. Load volume growth was primarily related to the continued expansion of J.B. Hunt 360box which leverages the J.B. Hunt 360 platform to access drop trailer capacity for customers across our transportation network. Total average effective trailer count in 2023 was 13,000 compared to 10,611 in 2022. At the end of 2023, JBT operated 1,958 tractors, predominantly independent contractors, compared to 2,242 at the end of 2022.

Operating income of our JBT segment decreased to $16 million in 2023, from $77 million in 2022. The decrease in operating income was driven primarily by the decrease in revenue and an increase in loss on sale of equipment, together with higher purchased transportation expense and equipment-related costs as a percentage of gross revenue. In addition, JBT incurred $4 million and $7 million in expense for the segment’s portion of the additional casualty claim reserves in 2023 and 2022, respectively.

2022 Compared With 2021

Consolidated Operating Revenues

Our total consolidated operating revenues increased 21.7% to $14.81 billion in 2022, compared to $12.17 billion in 2021. This increase was primarily due to higher revenue per load and increased load volumes within JBI and JBT, increased average revenue producing trucks and fleet productivity within DCS, and increased revenue in FMS primarily driven by a business acquisition, partially offset by decreased ICS load volume. Fuel surcharge revenues increased 94.2% to $2.43 billion in 2022, compared to $1.25 billion in 2021. Revenues excluding fuel surcharge revenues increased 13.4% from 2021.

Consolidated Operating Expenses

Our 2022 consolidated operating expenses increased 21.2% from 2021, while year-over-year revenue increased 21.7%, resulting in a 2022 operating ratio of 91.0% compared to 91.4% in 2021.

Rents and purchased transportation costs increased 14.6% in 2022, primarily due to an increase in rail carrier purchased transportation costs within the JBI segment and an increase in the use of third-party truck carriers by JBT, partially offset by decreased ICS load volume. Salaries, wages and employee benefit costs increased 22.1% in 2022 from 2021. This increase was primarily related to increases in driver pay and office personnel compensation and an increase in the number of employees as well as an increase in group medical expense compared to 2021.

Fuel and fuel taxes expense increased 75.6% in 2022 compared with 2021, due primarily to an increase in the price of fuel during 2022 and increased road miles. Depreciation and amortization expense increased 15.7% in 2022, primarily due to equipment purchases related to new DCS long-term customer contracts, the addition of trailing equipment within our JBI and JBT segments and increased intangible asset amortization expense resulting from the business acquisition within FMS.

Operating supplies and expenses increased 36.1% in 2022 compared with 2021, driven primarily by higher equipment maintenance costs, due to holding equipment longer, increased tire expense, increased tolls expense, and higher travel and entertainment expenses compared to 2021. Insurance and claims expense increased 92.7% in 2022, primarily due to increased cost per claim, higher insurance policy premium expense, and the inclusion of $94.0 million of expense for additional casualty claim reserves for claims subject to insurance coverage-layer-specific aggregated limits in 2022. General and administrative expenses increased 10.1% from 2021, primarily due to higher building rentals, higher software subscription expense, increased professional services expense, and higher bad debt expense, partially offset by higher net gains from sale or disposals of assets. Net gain from sale or disposal of assets was $25.4 million in 2022, compared to a net loss from sale or disposals of assets of $5.5 million in 2021.

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Net interest expense for 2022 increased by 9.7% compared with 2021, due to higher effective interest rates on our debt. Income tax expense increased 30.6% in 2022, due primarily to increased taxable earnings in 2022. Our effective income tax rate was 24.4% in 2022 and 23.9% in 2021.

JBI Segment

JBI segment revenue increased 29% to $7.02 billion in 2022, from $5.45 billion in 2021. This increase in revenue was primarily a result of a 24% increase in revenue per load, which is the combination of changes in freight mix, customer rate changes, cost recovery efforts, and fuel surcharge revenue and a 4% increase in load volume. Eastern network load volumes increased 9% and transcontinental loads increased 1% compared to 2021. Revenue per load excluding fuel surcharges increased 15% compared to 2021.

Operating income of the JBI segment increased to $800 million in 2022, from $603 million in 2021. The increase is primarily due to increased revenue and higher net gains from the sale of equipment during the current year, partially offset by higher rail and third-party dray purchased transportation expense, higher costs to attract and retain drivers, increased non-driver salary and wages, higher equipment-related expenses, increased insurance and claims expense, and higher costs due to rail and port network inefficiencies and customer detention of equipment. In addition, JBI incurred $33 million in expense for the segment’s portion of the additional casualty claim reserves in 2022.

DCS Segment

DCS segment revenue increased 30% to $3.52 billion in 2022, from $2.71 billion in 2021. Productivity, defined as revenue per truck per week, increased 11% compared to 2021. Productivity excluding fuel surcharge revenue increased 4% from 2021. The increase in productivity was primarily due to contractual index-based rate increases, partially offset by lower productivity of equipment on start-up accounts. Customer retention rates remained above 98%.

Operating income of our DCS segment increased to $361 million in 2022, from $314 million in 2021. Higher revenues and higher net gains from the sale of equipment during 2022 were partially offset by increased driver and non-driver wages, benefits and recruiting costs, higher equipment-related expenses, higher costs related to the implementation of new long-term customer contracts, increased insurance and claims expense, and higher bad debt expense when compared to 2021. In addition, DCS incurred $27 million in expense for the segment’s portion of the additional casualty claim reserves in 2022.

ICS Segment

ICS segment revenue decreased 6% to $2.32 billion in 2022, from $2.47 billion in 2021. Overall volumes decreased 3% when compared to 2021. Revenue per load decreased 3% when compared to 2021, primarily due to changes in customer freight mix, partially offset by higher contractual customer rates within the truckload business when compared to 2021. Contractual business was 48% of the total load volume and 50% of the total revenue in 2022, compared to 40% of the total load volume and 37% of the total revenue in 2021.

Operating income of our ICS segment increased to $57 million in 2022, from $40 million in 2021. The increase in operating income was primarily due to higher gross profit margins, partially offset by higher personnel costs, increased technology spending, increased insurance and claims expense, and higher bad debt expense during 2022. In addition, ICS incurred $22 million in expense for the segment’s portion of the additional casualty claim reserves in 2022. Gross profit margin increased to 14.6% in the current year versus 11.5% in 2021. Approximately $1.52 billion of ICS revenue for 2022 was executed through the Marketplace for J.B. Hunt 360 compared to $1.58 billion in 2021. ICS’s carrier base increased 15% when compared to 2021.

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FMS Segment

FMS segment revenue increased 15% to $1.04 billion in 2022 from $909 million in 2021, primarily due to the implementation of multiple new customer contracts and the acquisition of Zenith Freight Lines, LLC (Zenith) in 2022. The increase in revenue was partially offset by the effects of internal efforts to improve revenue quality across certain accounts as well as supply-chain related constraints for goods in the primary markets served by FMS.

Operating income of our FMS segment increased to $37 million in 2022, from $34 million in 2021. The increase in operating income was primarily due to increased revenues, partially offset by higher personnel salary, wages and benefits expense, higher equipment-related expenses, increased insurance and claims expense, increased driver recruiting costs, increased technology costs, and implementation costs related to new long-term contractual business. In addition, FMS incurred $5 million in expense for the segment’s portion of the additional casualty claim reserves in 2022, while 2021 included an aggregated benefit of $9 million from the net settlement of claims and the reduction of a contingent liability.

JBT Segment

JBT segment revenue increased 40% to $937 million in 2022, from $668 million in 2021. Excluding fuel surcharges, revenue for 2022 increased 31% compared to 2021, primarily due to a 22% increase in load volume and a 8% increase in revenue excluding fuel surcharge revenue per load compared to 2021. The 2022 growth in load count was primarily due to the continued expansion of J.B. Hunt 360box which leverages the J.B. Hunt 360 platform to access drop trailer capacity for customers across our transportation network. Total average effective trailer count in 2022 was 10,611 compared to 7,123 in 2021. At the end of 2022, JBT operated 2,242 tractors compared to 1,619 at the end of 2021.

Operating income of our JBT segment increased to $77 million in 2022, from $55 million in 2021. The increase in operating income was driven primarily by increased load counts and revenue per load during the current year, which were partially offset by higher purchased transportation expense, higher equipment-related expenses, increased personnel costs, increased insurance and claims expense, and increased technology spending related to the continued expansion of J.B. Hunt 360box. In addition, JBT incurred $7 million in expense for the segment’s portion of the additional casualty claim reserves in 2022.

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LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities totaled $1.74 billion in 2023, compared to $1.78 billion in 2022. The decrease was primarily due to decreased earnings of approximately $241 million, mostly offset by the timing of general working capital activities.

Net cash used in investing activities totaled $1.69 billion in 2023, compared with $1.55 billion in 2022. The increase resulted primarily from an increase in equipment purchases, net of proceeds from the sale of equipment, partially offset by lower business acquisitions in 2023.

Net cash used in financing activities was $58 million in 2023, compared with $530 million in 2022. This decrease resulted primarily from a decrease in current year treasury stock purchases and the fact that 2022 included the full retirement of our $350 million of 3.30% senior notes that matured in August 2022.

Our dividend policy is subject to review and revision by the Board of Directors, and payments are dependent upon our financial condition, liquidity, earnings, capital requirements, and other factors the Board of Directors may deem relevant. We paid a $0.28 per share quarterly dividend in the first quarter of 2021, a $0.30 per share quarterly dividend in the last three quarters of 2021, a $0.40 per share quarterly dividend in 2022, and a $0.42 per share quarterly dividend in 2023. On January 18, 2024, we announced an increase in our quarterly cash dividend from $0.42 to $0.43 per share, which was paid February 23, 2024, to shareholders of record on February 9, 2024. We currently intend to continue paying cash dividends on a quarterly basis. However, no assurance can be given that future dividends will be paid.

Liquidity

Our need for capital has typically resulted from the acquisition of containers and chassis, trucks, tractors, and trailers required to support our growth and the replacement of older equipment as well as periodic business acquisitions and real estate transactions. We are frequently able to accelerate or postpone a portion of equipment replacements or other capital expenditures depending on market and overall economic conditions. In recent years, we have obtained capital through cash generated from operations, revolving lines of credit and long-term debt issuances. We have also periodically utilized operating leases to acquire revenue equipment. For our senior notes maturing in 2024, it is our intent to pay the entire outstanding balances in full, on or before the maturity dates, using our existing cash balance, revolving line of credit or other sources of long-term financing.

We believe our liquid assets, cash generated from operations, and revolving line of credit will provide sufficient funds for our operating and capital requirements for the foreseeable future. At December 31, 2023, we were authorized to borrow up to $1.5 billion through a revolving line of credit and committed term loans, which is supported by a credit agreement with a group of banks. The revolving line of credit authorizes us to borrow up to $1.0 billion under a five-year term expiring September 2027, and allows us to request an increase in the revolving line of credit total commitment by up to $300 million and to request two one-year extensions of the maturity date. The committed term loans authorized us to borrow up to an additional $500 million during the nine-month period beginning September 27, 2022, due September 2025, which we exercised in June 2023. The applicable interest rates under this agreement are based on either the Secured Overnight Financing Rate (SOFR), or a Base Rate, depending upon the specific type of borrowing, plus an applicable margin and other fees. At December 31, 2023, we had a cash balance of $53.3 million. Under our senior credit facility, we had a $130.0 million outstanding balance on the revolving line of credit and a $500.0 million outstanding balance of term loans at an average interest rate of 6.44%.

We continue to evaluate the possible effects of current economic conditions and reasonable and supportable economic forecasts on operational cash flows, including the risks of declines in the overall freight market and our customers' liquidity and ability to pay. We regularly monitor working capital and maintain frequent communication with our customers, suppliers and service providers. A large portion of our cost structure is variable. Purchased transportation expense represents more than half of our total costs and is heavily tied to load volumes. Our second largest cost item is salaries and wages, the largest portion of which is driver pay, which includes a large variable component.

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Our senior notes consist of two separate issuances. The first is $250 million of 3.85% senior notes due March 2024, which was issued in March 2014. Interest payments under these notes are due semiannually in March and September of each year, beginning September 2014. The second is $700 million of 3.875% senior notes due March 2026, issued in March 2019. Interest payments under these notes are due semiannually in March and September of each year, beginning September 2019. We may redeem for cash some or all of the notes based on a redemption price set forth in the note indenture.

Our financing arrangements require us to maintain certain covenants and financial ratios. At December 31, 2023, we were in compliance with all covenants and financial ratios.

We are currently committed to spend approximately $868 million, net of proceeds from sales or trade-ins, during the years 2024 and 2025, as well as an additional $381 million thereafter. These expenditures will relate primarily to the acquisition of tractors, containers, chassis, and other trailing equipment. We had no other off-balance sheet arrangements as of December 31, 2023.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK