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Transports Lead Stock Rise as Indexes Set New Records

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By Jonathan S. Reiskin, Associate News Editor

This story appears in the March. 18 print edition of Transport Topics.

Trucking and transportation stock indexes have increased more rapidly over the past six months than those for the broad market, with most of the growth coming since the start of 2013.

While the Dow Jones industrial average has gained 9% in value to reach a record high in the six months ended March 11 and the Standard & Poor’s 500 has grown 8.9%, the transportation average has rallied 20.6% and the S&P trucking roster surged 24.3%.

Within the transportation average, UPS Inc. and FedEx Corp. contributed to the increase, as did four freight railroads and four trucking companies.

C.H. Robinson Worldwide Inc. and Expeditors International of Washington Inc. — the two non-asset-based logistics companies on the transportation average — posted some recent declines, however, after earlier gains.

Company executives and analysts offered no consensus on the meaning behind the gains. Optimists said the increases demonstrate a judgment by investors that trucking earnings will improve this year. Skeptics said trucking stocks are rising off a very low base period, and that well-run companies are benefiting from tight freight-hauling supply rather than a boom in demand for services.

“2013 is poised to be the ‘Year of Transports,’ ” analyst Peter Nesvold wrote to clients of Jefferies & Co. His confidence in the industry’s outlook has firmed as the year has progressed.

Three recent data points suggesting improvement, Nesvold said, are the jump up in January truck tonnage to a record high, the year-over-year gain in diesel consumption and the increase in airfreight for FedEx and UPS.

Nesvold told investors that rallies in freight-transportation stocks usually start in trucking.

“As go trucks, so go transports,” he said.

Tom Kretsinger Jr., president of American Central Transport, said he is optimistic based on the results of his privately held business based in Liberty, Mo., and conversations at the recent Truckload Carriers Association meeting where he was elected chairman... Continue reading (Transport Topics Account Required)