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 that
TWST: 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.
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