Global Air Cargo Market Heading Towards Recovery: Expert Sees FedEx as the International Leader

• On 1:56 pm EDT, Wednesday October 7, 2009

67 WALL STREET, New York - October 7, 2009 - The Wall Street Transcript has just published its Transportation and Logistics Report offering a timely review of the sector to serious investors and industry executives. This 81 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: China Export Tax -- Overcapacity in the Shipping Industry -- Market Balance -- Traffic Flow -- Asia-Pacific Region -- Import/Export Traffic -- Beneficiaries of Financial Strength -- Terminating Markets -- International Business -- Tanker Companies Versus Dry Bulk Companies -- Chinese Stimulus -- Real Demand Versus Stimulus Demand -- Monitoring Potential Acquisitions -- Automobile Industry -- Demand in Emerging Countries -- Falling Demand -- Future Oversupply -- Growth of Fleets -- Pickups in Infrastructure Spending -- Navigating the Downturn -- Supply and Demand -- Chinese Cell Phones -- Mobile Phone Market Growth -- Future Growth -- Stimulus Programs -- Temporary Boosts -- Inventory Stabilization -- Affects of Declines in Passenger Flights -- Capacity of Passenger Aircraft -- Improvement in Volumes -- Pricing and Margins -- Restructuring -- Forms of Consolidation -- Investing in Infrastructure -- Wage Concessions -- Railroad Expansion

Companies include: Diana Shipping (DSX); Star Bulk Carriers (SBLK); Nordic American Tankers (NAT); Overseas Shipholding Group (OSG); General Maritime (GMR); Federal Express (FDX); UPS (UPS); Forward Air (FWRD); Expeditors International (EXPD); Express-1; Tsakos Energy Navigation (TNP); Navios (NM); Vale (VALE); Excel (EXM); Teekay (TK); DryShips (DRYS); UTi Worldwide (UTIW); Old Dominion (ODFL); Arkansas Best (ABFS); J.B. Hunt (JBHT); Con-way (CNW); Atlas Air (AAWW); Air Transport Services Group (ATSG); Norfolk Southern (NSC); Union Pacific (UNP); CSX (CSX); Canadian National Railway (CNI); C.H. Robinson (CHRW); Kuehne and Nagel; Deutsche Post; YRC Worldwide (YRCW); Dynamex (DDMX); Ryder ®

In the following brief excerpt from the 81 page report, David P. Campbell Sr. of Thompson, Davis and Company, discusses the outlook for the sector and for investors.

TWST: Who do you like at this point?

Mr. Campbell: We've been continuing to recommend FedEx, United Parcel Service (UPS), Forward Air (FWD), Expeditors International of Washington (EXPD) and a smaller company called Express-1. Those have been the principal recommendations.

TWST: Let's start with FedEx, what's the appeal there, it's not a new name?

Mr. Campbell: We added Con-way (CNW) to our purchase list a few weeks ago. As far as FedEx is concerned, it is the most leveraged in terms of international airfreight because it operates an airfreight system in the world, and therefore, it will be a principal beneficiary of an upturn, if it continues in the cargo markets. That is one of the biggest reasons that FedEx reported better-than-expected August quarterly results, and the reason for the company's estimate that earnings may continue to increase sequentially in the November quarter. The profitability of the company is recovering at a faster rate than the company's June estimates, and therefore, many investors' estimates.

TWST: Where are they getting the leverage at this point?

Mr. Campbell: The leverage is in the international package business, which up until the month of April was pretty flat, but since then it's been going up. FedEx is obviously managing a fixed cost structure in their aircraft operations around the world and carrying a lot of excess capacity. That capacity is being better utilized now with packages and high-priority freight.

TWST: Are they taking share or is this just reflecting a pickup in the market in general?

Mr. Campbell: Of course, FedEx has increased its share of the market in the domestic business, where DHL terminated operations in January. There are people who think that they are gaining share internationally because DHL no longer offers a domestic service. The share gains internationally could be coming also from other airlines that are not adding as much or reducing capacity. FedEx may be capturing some business from those companies. The sequential package growth in the third quarter suggests that they are gaining share from small package operations such as TNT and DHL.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 81 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

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