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U.S. trucking industry has been witnessing significant demand in 2018. The trucking industry is the lifeblood of the economy as it moves more than 70% of the nation’s freight by volume. Truck transport is a “derived demand” industry, which means requirement for truckers depends on the demand for the products that trucks haul. Consequently, trucking serves as a barometer of the U.S. economy.
Robust Demand for Truckers
Trucking industry is currently benefiting from two factors. Firstly, the U.S. economy is on solid footing. In its 2017-2018 Freight Transportation Forecast, the American Trucking Association (“ATA”) has predicted continuous growth for truckers driven by manufacturing, consumer spending and international trade over the next 12 years.
Secondly, the trucking industry is currently facing capacity crunch. A healthy labor market with unemployment rate at its lowest in nearly 18 years has resulted in severe shortage of drivers. This has raised the price for truckers. According to the ATA, the United States is currently facing truck driver shortage of approximately 50,000.
Moreover, trucking industry has discovered a new avenue of growth as the demand for online shopping is booming in the United States. Large e-commerce companies are booking truckling space to deliver their products. The ATA estimated that the country will need 898,000 more drivers over the next decade to keep up with growth and demand.
Growth Induced Policies
The two pro-growth agendas of President Trump, namely, significant cut in corporate taxes and deregulation are major catalysts to the trucking industry. A large part of truckers book much of their revenues in the homeland. Consequently, a significant reduction in corporate tax rate borne by truckers would be immediately accretive to cash flow.
Moreover, the Trump administration intends to spend a whopping $1.5 trillion on several infrastructure projects like constructing new roads, bridges, highways, railways and waterways across the country over a period of 10 years. This project will generate significant demand for manufacturing sector, which in turn will raise demand for freight, benefiting the truckers.
Zacks Favors Truck-Transportation Industry
The Truck Transportation industry is currently in a strong position from the Zacks Industry Rank perspective. The industry is currently in the top 4% (10 out of 256) of the Zacks categorized industries, suggesting it is well-positioned. Historically, the top 50% of the Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
Over a year, the Zacks Truck Transportation Industry increased 3%. In comparison, stock price of six major truckers, ArcBest Corp. (ARCB - Free Report) , Marten Transport Ltd. (MRTN - Free Report) , Old Dominion Freight Line Inc. (ODFL - Free Report) , Landstar System Inc. (LSTR - Free Report) , Forward Air Corp. (FWRD - Free Report) and Covenant Transportation Group Inc. rallied 28.4%, 10.6%, 9.7%, 9.5%, 8.7% and 5.4%, respectively.
Bottom Line
A robust U.S. economy, massive tax haul and business friendly policies of the government are anticipated to fuel trucking industry’s growth. These positives will further drive the stock price of truck operators.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Will the Bull Run Continue for Trucking Stocks?
U.S. trucking industry has been witnessing significant demand in 2018. The trucking industry is the lifeblood of the economy as it moves more than 70% of the nation’s freight by volume. Truck transport is a “derived demand” industry, which means requirement for truckers depends on the demand for the products that trucks haul. Consequently, trucking serves as a barometer of the U.S. economy.
Robust Demand for Truckers
Trucking industry is currently benefiting from two factors. Firstly, the U.S. economy is on solid footing. In its 2017-2018 Freight Transportation Forecast, the American Trucking Association (“ATA”) has predicted continuous growth for truckers driven by manufacturing, consumer spending and international trade over the next 12 years.
Secondly, the trucking industry is currently facing capacity crunch. A healthy labor market with unemployment rate at its lowest in nearly 18 years has resulted in severe shortage of drivers. This has raised the price for truckers. According to the ATA, the United States is currently facing truck driver shortage of approximately 50,000.
Moreover, trucking industry has discovered a new avenue of growth as the demand for online shopping is booming in the United States. Large e-commerce companies are booking truckling space to deliver their products. The ATA estimated that the country will need 898,000 more drivers over the next decade to keep up with growth and demand.
Growth Induced Policies
The two pro-growth agendas of President Trump, namely, significant cut in corporate taxes and deregulation are major catalysts to the trucking industry. A large part of truckers book much of their revenues in the homeland. Consequently, a significant reduction in corporate tax rate borne by truckers would be immediately accretive to cash flow.
Moreover, the Trump administration intends to spend a whopping $1.5 trillion on several infrastructure projects like constructing new roads, bridges, highways, railways and waterways across the country over a period of 10 years. This project will generate significant demand for manufacturing sector, which in turn will raise demand for freight, benefiting the truckers.
Zacks Favors Truck-Transportation Industry
The Truck Transportation industry is currently in a strong position from the Zacks Industry Rank perspective. The industry is currently in the top 4% (10 out of 256) of the Zacks categorized industries, suggesting it is well-positioned. Historically, the top 50% of the Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
Over a year, the Zacks Truck Transportation Industry increased 3%. In comparison, stock price of six major truckers, ArcBest Corp. (ARCB - Free Report) , Marten Transport Ltd. (MRTN - Free Report) , Old Dominion Freight Line Inc. (ODFL - Free Report) , Landstar System Inc. (LSTR - Free Report) , Forward Air Corp. (FWRD - Free Report) and Covenant Transportation Group Inc. rallied 28.4%, 10.6%, 9.7%, 9.5%, 8.7% and 5.4%, respectively.
Bottom Line
A robust U.S. economy, massive tax haul and business friendly policies of the government are anticipated to fuel trucking industry’s growth. These positives will further drive the stock price of truck operators.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>