67 WALL STREET, New York - October 3, 2012 - 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 special 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: FMCSA CSA Regulations - Regulatory Issues in the Trucking Industry - Trucking Pricing & Capacity Dynamics - Retail and Industrial Transportation Demand - Truckload, LTL, Parcel, Rail and Intermodal - Capacity Constraints Result in Pricing Power
Companies include: Air Transport Services Group, (ATSG), Atlas Air Worldwide Holdings I (AAWW), Expeditors International of Wa (EXPD), FedEx Corporation (FDX), Forward Air Corp. (FWRD), Hub Group Inc. (HUBG), Pacer International Inc. (PACR), Quality Distribution Inc. (QLTY), Ryder System, Inc. (R), United Parcel Service, Inc. (UPS), UTI Worldwide, Inc. (UTIW), Express-1 Expedited Solutions (XPO), Aegean Marine Petroleum Networ (ANW), Diana Shipping Inc. (DSX), Kirby Corporation (KEX), Rand Logistics, Inc. (RLOG), World Fuel Services Corp. (INT), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Microsoft Corporation (MSFT)
In the following excerpt from the Transportation and Logistics Report, an expert analyst discusses the outlook for the sector for investors:
TWST: You mentioned Kirby (KEX). What are some of your other favorite names in the group?
Mr. Sterling: Kirby is definitely one of my favorite names. I also like Rand Logistics (RLOG), a Great Lakes commodity shipper because of their dominant position, similar to Kirby.
Another name that I am positive on is Quality Distribution (QLTY). Quality is the tank truck version of Kirby. Kirby is the largest inland barge operator for chemical shipments and Quality is the largest tank truck operator for chemical shipments. Both Kirby and Quality are benefiting from the same dynamic of low natural gas prices leading to an increase in U.S. chemical production. Quality also has been expanding in what we call energy logistics, where they haul water for hydraulic fracking in the shales, but they are also moving oil out of the shales, such as the Bakken and the Eagle Ford. So they have two very strong legs of the stool with good demand between their core chemical business and the booming growth of shale oil and gas.
TWST: Are there any names you are cautious about right now, and if so, why?
Mr. Sterling: I think if you look at the freight forwarders, such as Expeditors (EXPD) and UTi Worldwide (UTIW), there is plenty of reason to be cautious. For instance, I talked about ocean carriers aggressively parking capacity, and therefore, driving up rates - that squeezes the margins for a freight forwarder because they have to pay for that purchased transportation cost, and there is a lag before they can fully pass along those costs to the customer. On the airfreight side, airfreight volumes have been lagging, so a freight forwarder does not have the volume growth to boost margins.
Furthermore, as we get into September, we are hearing a lot about new product tech product launches in the fall. You've got the Apple (AAPL) iPhone 5 coming, the mini iPad, Amazon (AMZN) Kindle, Microsoft (MSFT) Tablet, etc., and we are hearing that these companies are soaking up airfreight capacity for their product launches, which is pushing airfreight rates higher. Back in March, when Apple launched the iPad, airfreight rates spiked because Apple bought a lot of spot capacity. As airfreight rates rise this fall, we could see a squeeze for freight forwarders because they will have to pay much more for their airfreight capacity. In that situation, I would rather own an asset-based carrier, whether it's a FedEx (FDX) or a UPS (UPS) or a company like an Atlas Air (AAWW), which leases airplanes to DHL (DPW.DE), which is a core carrier for Apple, and therefore, a company like Atlas benefits from more flying because of the tech launches plus higher rates.
For more from this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers, and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
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