!

Starting June 1st, 2023 Our warehouse fee will be $0.65/cubic foot per month

In effort to lower the warehouse storage fee during inflation, we have went narrow aisle racking.This construction took us four months but the project is finally completed. With narrow aisle racking, we are able to drop storage by 24%.We as partners will go through this inflation together.

Starting June 1st, 2023 Our warehouse fee will be $0.65/cubic foot per month

In effort to lower the warehouse storage fee during inflation, we have went narrow aisle racking.This construction took us four months but the project is finally completed. With narrow aisle racking, we are able to drop storage by 24%.We as partners will go through this inflation together.

Blogs/hot-news

03/20/2023

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Trucking Sector Approaches Pivotal Point as First Quarter Concludes

    Trucking Sector Approaches Pivotal Point as First Quarter Concludes

    Deutsche Bank needs more proof before signaling ‘cyclical all clear’

    Is a back-half recovery in jeopardy? (Photo: Jim Allen)

    Uncertain Outlook for Trucking Industry

    In a Monday client note, Deutsche Bank analyst Amit Mehrotra described the current truckload fundamentals as extremely challenging. When transportation companies report earnings next month, he does not anticipate any "huge negative surprises." However, it is becoming less likely that trucking companies will experience a positive demand inflection in the second half of 2023, as is the widely held expectation.

    Consequential Earnings Season

    Mehrotra considers the upcoming earnings season to be one of the most significant in recent memory, as it will likely reflect bottom or near-bottom results. In addition, he acknowledged that macroeconomic risks are growing daily, which may cloud future projections. He predicts earnings for this cycle to trough in the first quarter, with year-over-year (y/y) growth comps bottoming in the second quarter. In general, Mehrotra anticipates similar results from the companies he follows, with his estimates averaging 1% below the consensus.

    Navigating a Challenging Environment

    Given the broader volume and pricing concerns, Mehrotra believes that transportation companies are navigating the current environment remarkably well, on average. As volumes have yet to increase, the "second half will be stronger" narrative has recently lost steam.

    Prolonged Destocking and Weak Imports

    Recent data from Cass Information Systems, a provider of payment services, revealed a prolonged period of retailers destocking inventories and a decline in imports. February was the first month in the last five to surpass the previous month in volume. During the month, shipments were only slightly down year-over-year, but total freight costs decreased by 10%. The Cass report identified a shift in mode composition from less-than-truckload and intermodal to truckload, concluding that the softer freight environment will likely continue for several more months.

    Chart: (SONAR: CLAV.USA) The Contract Load Accepted Volume Index measures accepted load volumes moving under contractual agreements. It excludes all rejected tenders. CLAV.USA remains depressed from levels posted a year ago

    A February survey of supply chain executives also showed transportation rates fell at the fastest pace recorded by the 6.5-year-old query. The Logistics Managers' Index indicated that capacity continued to expand at a near-record rate, which, in conjunction with weakening demand, weighed on pricing.

    Chart: (SONAR: NTIL.USA). The National Truckload Index (linehaul only – NTIL) is based on an average of booked spot dry van loads from 250,000 lanes and 10,000 daily spot market transactions. The NTIL is a seven-day moving average of linehaul spot rates excluding fuel. Spot rates are currently 34% lower y/y

    Knight-Swift Earnings Estimates Cut

    Mehrotra recently reduced his first-quarter earnings-per-share estimate for Knight-Swift (NYSE: KNX) by 9% and the full-year number by 14%. His 2023 estimate of $3.52 is significantly below the company's guidance of $4.05 to $4.25 per share. He attributed the pressure to Knight-Swift's "higher reliance on brokerage freight and West Coast imports." He also noted that many retailers are pulling forward bid cycles to lock in lower TL rates and pointed to Swift Transportation, with its large concentration of retail customers, as a detractor. However, his 2024 EPS estimate of $4.53 remains unchanged.

    J.B. Hunt and Werner Enterprises Estimates

    Mehrotra maintained his first-quarter estimates for J.B. Hunt (NASDAQ: JBHT) and Werner Enterprises (NASDAQ: WERN) at 1% above the consensus estimate. J.B. Hunt management expressed a more pessimistic outlook on volumes at the J.P. Morgan (NYSE: JPM) Industrials Conference after meeting with approximately 100 customers the previous week. While management still anticipates a second-half improvement, they expect it to be less significant than what their clients anticipate. Mehrotra noted that Werner's large dedicated fleet composition and long-term contracts in its one-way segment make the model more robust compared to those of carriers with irregular routes.

    Outlook for LTLs

    Mehrotra's prognosis for LTLs remained largely unchanged because he believes the industry may be experiencing a seasonal uptick. He remarked that Old Dominion (NASDAQ: ODFL) and Saia (NASDAQ: SAIA) appear to be on track to meet their first-quarter margin targets and that their volume comparisons become less challenging in the coming months. However, he cautioned that this must be weighed against the rising revenue headwinds caused by lower fuel prices. In January and February, both carriers experienced tonnage declines compared to the previous year.

    Real-Time Data Crucial for Mid-Term Outlook

    Mehrotra emphasized the significance of real-time data for determining the midterm outlook for transportation stocks in the coming weeks and months. He stated, "While 1Q results may mark the trough, there are emerging concerns on [second half] '23 and 2024 for which we need more clarity prior to cyclical 'all clear' status."

    Source: Company reports

     

     

    MintN

     

    Mint Nguyen

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