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How Have Major US Truckload Carrier Stocks Trended in 2018?

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May. 29 2018, Published 8:07 a.m. ET

US truckload carriers

The state of the trucking industry offers insight into the state of the economy. Trucks haul more than 70% of the total freight measured in tonnage in the United States. Although 2017 started on a normal note, the year ended with tightened capacity and higher freight rates. The spot market rates have moved well recently compared to the contract rates, which offers a good scope to freight brokerage companies. The e-commerce boom has done well for the less-than-truckload carriers. Freight rates have spiked at a faster pace compared to the full truckload rates.

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The US truckload segment is highly fragmented. The segment is expected to witness a lot of merger and acquisitions in upcoming quarters. In 2017, there was the combination of Swift Transportation and Knight Transportation. In this series, we’ll compare five major road carriers including Knight-Swift Transportation (KNX), JB Hunt Transport Services (JBHT), XPO Logistics (XPO), Schneider National (SNDR), and Werner Enterprises (WERN).

Trends in US trucking 

In the Tax Cuts and Jobs Act, the rules regarding capital expenditure, electronic logging devices, NAFTA negotiations, and a tight labor market are key factors in 2018. The American Transportation Research Institute has outlined a few critical challenges for US trucking companies including hours of services, driver shortages, infrastructure, and congestion.

Equity research companies are bullish on the US transportation and logistics sector in 2018. The companies’ main contention is growing freight volumes and a positive environment for higher pricing. Asset light companies will likely benefit the most from the current situation where spot rates have shown a lot of activity. The growing US and global economy should also help US truckload companies. The less-than-truckload companies are already banking on booming sales driven by e-commerce inside and outside the United States.

In terms of returns, 2017 was a good year for road transportation stocks. Let’s check out the returns of the trucking companies mentioned above in the past year.

  • JB Hunt Transport Services: 52%
  • Knight-Swift Transportation: 22%
  • Werner Enterprises: 43%
  • XPO Logistics: 106%
  • Schneider National: 48%

Major trucking and railroad companies in the United States account for 25.3% and 13.1%, respectively, of the SPDR S&P Transportation ETF’s (XTN) portfolio holdings. In the past year, XTN returned 24.7% to investors.

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