Our WR Transport index increased 1.3% last week and outperformed the S&P 500 which was flat. TL stocks (+2%) performed best as spot rates increased materially during Roadcheck week and commentary from WERN and KNX was very positive at a conference. And R was the best performing transport stock as used truck pricing for the industry showed nice improvement in May. We still see EPS risk for R next year, but improvement in its used truck pricing should support its valuation.
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Amid continued strong freight fundamentals and rising fuel prices, our WR Transport index surged 8% last month, outperforming the S&P 500 by 560bp and outperforming every single S&P 500 sector. It was the best performance for transports in 8 months, led by the LTLs (+23%), TLs (+9%) and Forwarders (+8%), while only the Integrators (+1%) and Truck OEMs (-6%) underperformed.
Our WR Transport index increased 1.1% last week and yet again outperformed the 0.5% increase in the S&P 500. Transports are now nicely outperforming this year with our Transport index up 7% YTD vs. the S&P 500 which is up 2%. LTL stocks continued to outperform last week despite the drop in oil prices and our LTL index is now up 19% YTD. TL stocks also outperformed last week and KNX (+3%) finally outperformed its peers after a brutal stretch of recent underperformance. CP (+3%) also outperformed nicely after it avoided a lengthy strike and as crude oil spreads widened significantly. On the other hand, KSU (-3%) underperformed as the peso continued to weaken and following the steel/aluminum tariffs announced by President Trump.
We spoke with a large private LTL carrier about recent pricing and demand trends. This carrier has seen tonnage growth accelerate so far in 2Q, with tonnage up 7%-8% QTD vs. 5%-6% in 1Q. This carrier noted that TL spillover is helping as shipments over 10,000 pounds are tracking up over 10% QTD. Additionally, pricing has accelerated even more so far in 2Q with pricing up 6%-7% QTD vs. 3%-4% in 1Q. This is resulting in better than normal margin improvement as our contact expects his margins to improve around 300bp y/y in 2Q. Our contact added that he raised driver pay 3.5% this year, in line with historical increases and he expects to grow his fleet 3-4% this year, which is slightly less than normal. This carrier also operates over 500 TL trucks and noted that capacity is as tight as it can be. He expects TL pricing to increase 10%-15% this year and total TL revenue to increase 25%-30% including reduced deadhead and 6% fleet growth. And relative to the 3.5% increase in LTL driver pay, this carrier’s TL driver pay has already increased 8% this year.
Our WR Transport index increased 1.5% last week and outperformed the 0.3% increase in the S&P 500. LTL stocks (+4%) were best last week as the LTLs were universally positive at our Transport Conference last week. Our Transport index is now up nearly 6% YTD, outperforming the 2% gain for the S&P 500.
Our WR Transport index increased 0.5% last week and outperformed the 0.5% fall in the S&P 500. Heading into our Transport conference next week, our Transport index is now up over 4% YTD, outperforming the 1.5% gain for the S&P 500. The LTLs (+12%) are by far the best performing transport sub-sector YTD, followed by the Freight Forwarders (+5%) and the large-cap Rails (+4%), but the Truck OEMs (-11%) and TLs (-3%) continue to lag.
Our WR Transport index surged 5.4% last week and materially outperformed the 2.4% rise in the S&P 500. With a strong end to earnings season (really big beats from EXPD and ARCB last week) and rising oil prices, many transports have now fully or almost fully recovered their losses from a few weeks ago when CAT ignited fears about a peak in the cycle. Our Transport index is now up 4% YTD, outperforming the 2% gain for the S&P 500. After ACRB’s report last week and rumors about Amazon potentially buying ODFL, the LTLs (+12%) are by far the best performing transport sub-sector YTD, an amazing 2-week recovery after they were down 5% YTD through the end of April. Following the LTLs, the large-cap Rails (+4%) and Freight Forwarders (+4%) are performing best, but the Truck OEMs (-13%) and TLs (-5%) continue to lag.
Our WR Transport index fell 0.4% last week and slightly underperformed the S&P 500 which was down 0.2%. We had mixed performance across the group with the LTLs up 2.5% on average following YRCW’s better than feared report, and the non-asset Forwarders down 7% after CHRW’s underlying 1Q miss.
What a week… 15 earnings reports, 14 earnings calls, 10 stocks down at least 5% on the week, and 5 stocks up at least 5% on the week. Not a great mix considering that 14 of the companies that reported last week beat expectations. So it’s a tough market to navigate right now, but one increasingly telling you it’s getting later in the cycle: non-asset Forwarders (+2% YTD) and the large-cap Rails (+1%) are now both outperforming YTD, while the TLs (-10%), Truck OEMs (-10%) and LTLs (-4%) are now each underperforming the S&P 500 which is flat YTD. We hosted a conference call on Friday (04/27/18) to recap earnings season so far: click here for the slides.
Our survey is once again universally positive this quarter, including record-high expectations for TL, LTL and Intermodal pricing increases. Rail pricing expectations, as well as overall volume expectations, also reached multi-year highs. So our survey is clearly indicative of very strong freight fundamentals.
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