Goldman Sachs' Transportation Update (UPS, CP, JBHT)

Goldman Sachs is out with a research report this morning, where takes a look at recent trends in the global transportation market and what it means for stocks in its coverage space. The analysts noted that volumes across the board were surprisingly strong in the railroad and truckload segments. The GS analyst said that they expect growth to be slow as inventory restocking and fiscal stimulus moderates. They also noted that relatively weak retail sales in the summer does not bode well for shipping volumes. • Air Freight: the analysts said that overall demand is holding up with express pricing still in the early stages. They noted that, even if volumes slow, express package pricing should continue to improve given a new rational duopoly structure. Goldman rates United Parcel Service UPS as a Buy. • Railroads: the analysts noted the recent warm weather, which is driving a rebound in coal volumes. They added that railroads continue to add employees and take railcars out of storage, which should lead to moderating incremental margins. Goldman rates Canadian Pacific CP as a Buy. • Trucking: the analysts said that August volumes improved, though they are hearing from sources that trends are slowing. They also noted that truckload capacity utilization of 94% continues to increase —a positive for pricing. Goldman rates JB Hunt Transportation JBHT as a Neutral.