Today’s Pickup: Why investing in trucking stocks is the right move

Stock market

Good day.

Do you have money to invest? If so, Martin Tillier has some advice: it might be time to invest in trucking and logistics company stocks.

Tillier, writing on a blog on the NASDAQ website, highlights the reasons that investors should consider long-term investment in trucking and logistics. “At times, it seems that economic news and trends are coming together to create a perfect storm for one type of business, yet stocks in that sector are still depressed due to short-term, cyclical factors,” he writes. “That is the case right now in the transport sector, and more specifically in trucking and logistics. If you can get past the political news and the noise there are some fundamental changes happening in the U.S. that must, over time, benefit trucking companies.”

Tillier notes that money spent on infrastructure, regardless of where it comes from, will improve the fortunes of an industry that counts infrastructure as a critical piece to getting its job done, not to mention the construction and civil engineering companies that would benefit.

He also takes note of the impact autonomous trucks will have. “Disruption of the labor market is a likely consequence of that momentous change, but it will result in a massive cost reduction for firms like UPS, FedEx, and J.B. Hunt Transport,” he says. “Some of that will be passed on to the consumer, but it will also make for much better margins in the industry. Even with better margins, lower prices require increasing volume for bottom line growth, but for trucking companies that shouldn’t be an issue. The well documented shift to online shopping and normal economic growth will take care of that.”

He finishes by noting that transport stocks have been weak so far this year, creating opportunity. “More cautious investors should consider a broad-based transport ETF such as IYT or XTN, but a strategy more focused on the trucking industry would be preferable, utilizing the three stocks mentioned above or others if you prefer. Whatever your choice, given the fundamental shifts taking place in the economy and consumer behavior, exposure to logistics companies is a must for long-term investors.”

Did you know?

According to a report on Trucks.com, truck drivers in California have won more than $35 million in court rewards (on over 300 cases) for being misclassified as independent contractors. There are still 196 cases pending.

Quotable:

“If I want to be an employee truck driver, I can find that job. It’s much harder if I want to be an independent contractor running my own business. Why would I want to do that? Because I’m an entrepreneur and I want to build a business and live in a world where the harder I work, the more money I make.”

- Greg Feary, president at transportation law firm Scopelitis, Garvin, Light, Hanson & Feary, on the reasoning behind the government rescinding controversial guidance on classifying contractors

In other news:

Government withdraws independent contractor guidance

A 2015 Department of Labor guidance on what classifies workers as employees rather than contractors has been withdrawn by the Trump administration.  (Heavy Duty Trucking)

Measuring the impact of the Panama Canal expansion

It was touted as an economic driver, especially for the East Coast. The expansion of the Panama Canal would lead to larger cargo ships coming into East Coast ports, but the reality is somewhat different. (Fleet Owner)

NAFTA freight trade tops $100B

NAFTA freight trade in March topped the $100 billion mark as all five modes showed increases, according to the latest government data. (The Trucker)

Consumer confidence suggests sustained economic growth

The latest Consumer Confidence Index suggests that Americans are feeling good about the economy, suggesting a sustained period of growth. (Transport Topics)

What are the biggest risks to supply chains?

A report identifies the areas of greatest concern within global supply chains, including the rise of protectionism around the globe. (Supply Chain Brain)

Final Thoughts

For publicly traded trucking companies, Martin Tillier’s blog on why they are good investment options long term is good news, but there is a ripple effect for all of the industry. As the public companies rise in value, so too will the value of private carriers, and that is good for a number of reasons, including the ability to raise capital as needed.

Hammer down everyone!