So much for risk-on following the G20 meetings a week ago. Even with a market rally on Monday and a day off on Wednesday, our WR Transport index managed to fall 8.5% last week, materially underperforming the 4.6% drop in the S&P 500. Literally nowhere to hide last week with the Rails, LTLs and Forwarders each down 8% on average, the Integrators (UPS/FDX) down 11% and the TLs down 12%. And with just a few weeks remaining this year, our Transport index is now down 8% YTD, underperforming the 1.5% drop in the S&P 500.
Search Coverage List, Models & Reports
Search Results1-10 out of 4340
We spoke with a large consumer products shipper about TL pricing and capacity trends. Our contact’s primary carrier tender acceptance rates have improved over 700bp since the summer to over 90% the past 3-4 months. Tender acceptance levels are now in line with the company’s historical averages and spot premiums have fallen by 30%. Most recently, capacity tightened up during Thanksgiving week, but has subsequently eased again so far in December. While capacity has loosened, our contact already locked in a 4% contractual TL rate increase for 2019. He's also planning to shift around 1%-2% of his volumes from intermodal to TL as intermodal rates are now expected to increase more than TL rates next year.
Over the last 2 days, ODFL and SAIA provided updates on November tonnage. Based on better tonnage and yields, we’ve raised our 4Q EPS estimate for ODFL further above Cons., but lowered our 4Q EPS slightly for SAIA based on lower tonnage.
After October’s bloodbath, our WR Transport index rebounded 3.2% last month and outperformed the 1.8% rise in the S&P 500. With growing hope for a trade deal last month, Truck OEMs (+9%) outperformed the most, followed by the Integrators (+5%) and Forwarders (+4%) with more international exposure. Meanwhile, the Rails (+3%) and Truckers (+2%) with more domestic exposure relatively lagged last month.
Our WR Transport surged over 4% last week, but modestly lagged the 4.8% rise in the S&P 500. We saw broad-based strength last week, led by the Rails (+5%) and the Integrators (+4%). No meaningful news out of the G20 meetings yet (as of Saturday night), but we note that transports have outperformed other Industrial sectors this year as transports have more domestic exposure and face almost no direct input cost headwinds from rising tariffs. So while progress towards a trade deal at G20 would likely be positive for the market overall, it wouldn’t surprise us to see Transports relatively lag other Industrial stocks which have underperformed this year. Within our coverage area, any positive news flow on tariffs would likely be most positive for Truck OEMs (input costs) and FDX/UPS/AAWW/EXPD (global trade exposure).
We spoke with a large industrial products shipper about current TL capacity and pricing trends. The shipper has seen his primary carrier tender acceptance rates increase by over 10 percentage points to 90% over the past 2-3 months. As a result, our contact’s spot premiums have been cut in half to 10%-15% on average vs. premiums around 30% over the summer. This shipper noted that brokers are starting to aggressively go after market share again, and spot pricing with brokers is now at parity with our contact’s contractual rates across many lanes. The main exception is the West Coast where capacity remains tight and spot rates remain high. Looking out to 2019, our contact has a mix of one-year and two-year contracts coming up for renewal. On the business this shipper already re-priced this year, he expects rates to increase only slightly next year. But on the business that didn’t re-price in 2018, our contact expects his rates to increase around 10% next year.
Last week, we hosted meetings with EXPD’s CEO and CFO at the company’s headquarters. We’re raising our 4Q EPS estimate and lowering our 1Q:19 EPS as we adjust our model for a tariff pull-forward before year-end and subsequent lull early next year. Beyond the impact of tariffs, EXPD continues to see strength in the U.S. economy. We left our meetings impressed with mgmt. and EXPD’s non-asset model and strong cash flow and margins through the cycle. But we retain our Underperform rating as we expect slowing net revenue and earnings growth next year into tough comps, lower ocean gross yields, and slowing airfreight growth.
Over the past week, we surveyed over 50 shippers about the upcoming January 1 tariffs. Not surprisingly given the recent spike in October West Coast port volumes, nearly 60% of the shippers we surveyed have pulled forward some import volumes into the U.S. But only one-third of shippers expect to pre-ship additional import volumes into the U.S., suggesting that the pull forward has peaked and that ocean volumes are likely to start moderating going forward.
Last night (11/26/2018), House Ways & Means Committee Chairman Kevin Brady (R-TX) introduced a ~300 page tax extenders bill that Congress expects to consider during the current lame-duck session. There are still several steps before this bill becomes a law, but last night’s proposal includes a reauthorization of the short-line tax credits with 2 key changes:
Our monthly Trackin’ Trucks report leverages our work on the Trucking and Truck OEM sectors with a 40+ picture book tracking the key supply, demand and pricing trends that are important for the Trucking and Truck OEM stocks. Each month, we also update our global truck production forecasts and mark-to-market our Truck OEM models accordingly.
- 1 of 434
- next →