This weekly report presents the most recent views we are hearing from industry insiders and summarizes the research of Wolfe Research. Included are (1) key takeaways, selected shipper comments; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight & logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel.
Transports with Most Momentum: KNX, RRTS, CNI, KEX sounded relatively best to us, and nobody sounded particularly bad
This month’s Macro examines March and April data. As shown on Slide 8, freight vols on avg. declined 2% y/y in March and are tracking up less than 1% y/y based on preliminary April data after growing close to 3% the 1st two months of the year. Moreover, our proprietary Seasonal Freight Index (Slide 7) has dipped back below 50 the past 2 months after accelerating sharply late last year and early this year.
We emailed out a 70-page report reiterating our bullish TL thesis. We recommend buying TL stocks into early signs of tighter capacity and our expectations for capacity to tighten further the next few months and lead to stronger TL pricing into 2014. We also published a 60-page report on the rails and our expectation for stronger coal vols ahead. Bound hard copies of both reports will be available at our Global Transport Conference on Wednesday, May 22 and Thursday, May 23. If you can’t attend our conference, email us for hard copies of either report.
Natural gas prices have more than doubled over the past year and are currently trading back above $4.00/MBtu. Our conversations with coal-fired utilities indicate Powder River Basin (PRB) and Illinois Basin coals are now back in the money, and even Northern App (NAPP) coal is in the money for some plants. However, Central App (CAPP) coal will structurally remain uneconomic until gas rises closer to $6 for most plants. Based on higher gas prices, many utilities are reporting higher coal capacity factors versus a year ago. Utility coal stockpiles are also starting to come down, and coal production is ramping back up, and this should create a favorable backdrop for domestic rail coal volumes ahead.
Our 6th Annual Global Transport Conference will take place on Wednesday, May 22 and Thursday, May 23. This report is a guide for investors attending the conference, including a list of suggested questions to ask each company and a snapshot of our earnings models.
This weekly report presents the most recent views we are hearing from industry insiders and summarizes the research of Wolfe Research. Included are (1) key takeaways, selected shipper comments; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight & logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel.
The USDA released its initial grain production and grain export forecasts for the upcoming 2013-14 crop year. Total corn, wheat and soybean (the 3 major crops moved by the rails) production is expected to increase 22% y/y after dropping 8% last year and 14% in total the past 3 years. The USDA also expects total exports for these 3 crops to increase 18% y/y, a major reversal from a 30%+ decline the past 2 years.
This weekly report presents the most recent views we are hearing from industry insiders and summarizes the research of Wolfe Trahan. Included are (1) key takeaways, selected shipper comments; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight & logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel.
We hosted meetings with CNI’s Chief Marketing Officer and new head of Investor Relations. CNI is seeing improved rev. and network operations in 2Q after a weak 1Q, and mgmt is confident that it should continue to see GDP+ vols and inflation+ pricing the next several years.