Hurricane Florence is providing a catalyst to transportation stocks as investors bet on the storm causing a near-term spike in demand across the U.S. Southeast.
To be sure, the storm has yet to make landfall and its actual impact remains unknown. Moreover, non-profit groups such as the American Logistics Aid Network are already looking to help coordinate and supply transportation services to affected areas.
Nonetheless, the impending approach of Florence is providing some uplift to the transportation sector. The Dow Jones Transportation Index is up 3.5% since Monday.
Deutsche Bank said in a research report that “concerns around truck supply from the rising severity of Hurricane Florence” are helping lift transportation industry names.
“While we hope the storm weakens significantly and quickly, major weather events can have a significant impact on transportation supply/demand dynamics – particularly for trucking companies,” Deutsche Bank said.
A similar pattern played out during last year’s major weather events. Deutsche Bank says that spot rates in the period following Hurricane Harvey and Irma last year saw trucking spot rates increase 9%. But Deutsche Bank notes that the impact could be even more severe for Florence due to higher population density of Eastern Seaboard relative to areas impacted last year.
“We note that roughly 40% of the U.S. population lives on the east coast, which means Hurricane Florence could have a disproportionate impact on supply chains relative to previous storms,” Deutsche Bank said.
The immediate near-term impact stems from inventory restocking as residents in North and South Carolina and Virginia strip store shelves.
Werner Enterprises (NASDAQ: WERN) saw its shares rise over 9% on Monday, a move which may stem from the carrier’s exposure to retailers such as Dollar General and Dollar Tree, Deutsche Bank said. Werner’s shares have since slid 4.5%
But Deutsche Bank says Knight-Swift Transportation (NYSE: KNX) and Landstar Systems (NASDAQ: LSTR) are “the most exposed” to any Florence-related uptick in transportation activities. Knight-Swift shares are up 2.8% this week while Landstar shares are up 4%.
“While we sincerely hope Hurricane Florence weakens significantly over the next several hours, we will continue monitoring the situation given its potential impact to U.S. transportation companies,” Deutsche Bank said.
Complete Hurricane Florence Coverage
Though cobalt is an integral part of our lithium-ion batteries, the extraction of the trace element is a huge cause for concern. Blockchain could provide respite by bringing accountability and transparency into cobalt supply chains.
New power given to the Federal Maritime Commission to scrutinize the effects of ocean carrier competition has been put on hold by the government shutdown.
Surprise fees for practice that reduces congestion at ports and improves driver turns amounts to ‘dirty pool’ on part of the steamship lines.
Capacity additions set to have knock-on effect for trades into North America; Australia’s port strike to cause Pacific Rim ripples.
Plus: Skewering Theresa May, B.C. rail investigations, California clean air program assessment
It’s a long road from the wellhead down to the fuel going into a truck. Who makes money along the way?
The advent of modern communications technology such as, obviously, the mobile phone, has created a new, yet poorly understood and under-researched, form of driver distraction. Australian road authorities are calling for research and are updating their road rules.
Rolling strikes by workers at the Hutchison Ports Australia box terminals in Sydney and Brisbane started at 6:00 a.m. (Australian Eastern Standard Time) yesterday January 17 and are causing logistics chaos.
The Conservative and Labour Parties are locked in a Brexit stand-off, with Labour leader refusing to enter into discussions with the Prime Minister unless a no deal Brexit is taken off the table. While Theresa May has said that it is not within her power to remove no deal from the list of Brexit possibilities.
This April, the Freight Alley Haul of Fame museum will open in FreightWaves’ new corporate headquarters in downtown Chattanooga.