Performance of subindustries versus benchmarks
Over the last week, air freight and courier service providers registered the largest gains among subindustry groups within the iShares Transportation Average ETF (IYT). The group reported 3.98% returns, driven by strong second-quarter performance. Multimodal logistics service firm C.H. Robinson Worldwide (CHRW) rose 7.05%, and leading courier companies United Parcel Services (UPS) and FedEx (FDX) rose by 3.76% and 2.01%, respectively.
Trucking firm Landstar System (LSTR) reported robust operating results for 2Q15, and its stock rose by 5.72% over the last week. In contrast, J.B. Hunt Transport Services (JBHT) witnessed a decline in revenue and less-than-anticipated growth in operating earnings. JBHT’s 2Q15 performance wiped away the gains it made during the first quarter of this year. The stock has fallen by 0.12% in the year to date.
Among the subgroups, airline operators alone witnessed a decline last week, reporting -1.81%. While US airline operators have been challenged by capacity concerns in 2015, their profitability has benefitted to a great degree from lower oil prices.
In aggregate, airlines saw muted revenue growth but posted healthy traffic numbers and profit margins. But the recent Department of Justice probe launched on Delta Air Lines (DAL), United Continental (UAL), Southwest Airlines (LUV), and American Airlines (AAL) is likely to have contributed to this temporary fall. The government agency is investigating suspected unlawful coordination by the carriers to keep airfares high. The investigation has also triggered a number of lawsuits against these carriers.