(John Paul Hampstead – FreightWaves)
Investment bank JP Morgan has issued its 2018 outlook for transportation and logistics, picking winners and losers for the upcoming year in sectors like parcels, railroads, truckload carriers, logistics companies, and intermodal. JP Morgan set December 2018 price targets for a number of stocks and offered commentary on the cyclical and secular forces acting on US freight markets.
Positive macro trends include elevated valuations, stocks trading well on tax reform momentum, and high expectations for rising truckload rates through next year. Risk factors include anticipated rising interest rates as the business cycle matures which will reduce margins, and the expectation that geopolitical uncertainty and tight labor markets will persist through 2018.
JP Morgan prefers asset-light brokers based on their flexibility navigating a truckload rate cycle initially led by a cost-push from driver pay, combined with an expected tilt toward more spot capacity vs. contracts—rising rates and more action on the spot market should keep brokers’ balance sheets healthy in 2018 despite the longer term threat of disintermediation from emerging digital technologies. Click here to read more.