Smaller Transportation Stand Outs - Forward Air (FWRD) and Express 1 (XPO)
2009-10-27 11:07:00
As part of our recent 69 page Transportation & Logistics Report we spoke with David Campbell Sr. at Thompson, Davis & Company. He gave his outlook for the entire sector including some smaller companiesthat seemed well positioned to survive;TWST: You mentioned a couple of smaller names as well. What's the interest in smaller names in a tough environment like this?Mr. Campbell: The smaller, well-capitalized companies like Forward Air and Express-1 are beneficiaries in the United States of their financial strength, vis-à-vis some larger companies that don't have profitable operations. We look for beneficiaries of financial strength, and the capacity to carry more business without adding debt to balance sheets. These two are good examples of thatTWST: Where are they picking up market share from?Mr. Campbell: We think that companies like Forward Air and Express-1 would benefit from traffic lost by Roadway or other highly leveraged, bigger competitors that may be terminating markets in their systems. Forward Air does not carry ground freight, but some of its freight could be and has been carried by less profitable trucking companies. Forward Air may benefit from gains in market share, as well as growth in the international part of its business, where the company picks up and delivers international freight in the U.S.TWST: As the economy gets better, can they hold their gains in market share or are they likely to give some of those up?
Mr. Campbell: It may be difficult for competitors who lost the traffic to get it back. Customers are satisfied with Forward Air and Express-1 services, and so they are probably going to retain a lot of that traffic.
Outlook for Marine Transportation
2009-10-14 10:10:16
As part of the Transportation Report we asked Natasha Boyden of Cantor Fitzgerald to give us an overview of Marine Transportation . She thinks the dry bulkers are certainly moving up a bit better and their rates have been falling dramatically.Ms. Boyden: The dry bulkers are certainly moving up a little better. Their rates over the last couple of weeks have been falling dramatically and I think a lot of that is due to the fact that Vale (VALE) has taken itself out of the market, is no longer putting in orders I think. But in the second half of the year, we're certainly seeing lower iron ore imports into China, as their inventory is holding steady at about 76 million tons and they certainly don't look to be increasing that. Steel prices have fallen pretty dramatically, down about 15% in the last month, which to us does indicate a weakening in demand for the products. I think the last quarter of this year is going to be definitely not as good as the first three quarters, which I think took everybody by surprise. I think the worry here is if they drop another $10,000 it will be at breakeven again or below. It's certainly something we're watching very closely
The fact that the dry bulk space has been behaving so well is really, in our opinion, much to do with the Chinese stimulus package. It was about $586 billion in 2009 and 2010, about 50% of that is for infrastructure. Very clearly that would stimulate domestic steel demands, etcetera. It's a question of whether or not we're seeing real demand or we're seeing stimulus demand. Scrapping levels were pretty high in the first half of 2009, but they have slowed down since. Deliveries have been much less than anticipated. We expect that to reverse later this year.
Featured Company - Federal-Mogul Corporation
2009-10-12 10:38:49
Our featured interview this week is with Federal-Mogul Corporation (FDML)The complete interview with Jose Maria Alapont, President and CEO, is now available.
Federal-Mogul Corporation is a leading global supplier of powertrain and safety technologies, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, industrial, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. The company's leading technology and innovation, lean manufacturing expertise, as well as marketing and distribution deliver world-class products, brands and services with quality excellence at a competitive cost. Federal-Mogul is focused on its sustainable global profitable growth strategy, creating value and satisfaction for its customers, shareholders and employees. Federal-Mogul was founded in Detroit in 1899. The company is headquartered in Southfield, Michigan, and employs nearly 39,000 people in 36 countries.
Transportation a Growth Sector ?
2009-10-07 22:32:55
As part of our recent Transportation and Logistics Report we conducted a Roundtable Forum with Helane Becker of Jesup & Lamont Securities , Robin Byde of HSBC Bank Plc , Kevin Kirkeby of Standard & Poor's and David G. Ross of Stifel Nicolaus. Mr.Ross gave us his snapshot on the industry;Mr. Ross: On the volume side,we hit the bottom for absolute freight volumes in the second quarter, and we should grow softly from that base. Over the next few quarters, we should see stimulus programs, like cash-for-clunkers program, boosting freight at least temporarily. Plus, we believe the inventory destocking that has occurred over the past year is nearing an end, and we should see at least inventory stabilization, if not a slight inventory buildEven though the path for an economic recovery will be mild for a protracted period, there will still be some volume growth from the rails and truckers. Select companies within the transportation sector will start to show earnings growth, probably driven more by changes in capacity than by any change in near-term demand.
The outlook on the regulatory front for Education.
2009-09-16 09:41:22
As part of our Education report we spoke with George Sakellaris of GARP Research & Securities Co. and asked him about the regulatory issues facing the education industryMr. Sakellaris: "That's the big question here. I think that's something that's held some of the stocks in check over the past several months It's certainly a topic that's been batted around significantly in the investment community. It's hard to say. Negotiated rule making sessions are coming up in the fall, and some new rules could emerge as early as Q1 of next year. My personal opinion is that it's a lot of hype that may result in little change. I think the administration's topline goal is to get more college graduates. Given the capital intensity and other growth impediments at traditional schools and the almost unlimited capacity potential and open enrollment policies of most for-profit educators, I think the administration will have a hard time reaching its goals without embracing not only community colleges, which is what they have done so far, but also some of the higher quality for-profit educators. "