Page 39 - ATR 3 2016 web

PHOTO: Jon D. Kennedy

Jason Seidl, left at podium, speaks at the ATA Annual Conference

attitude matches his client base, which
is not interested in buying at the
moment. Seidl said he recently returned
from a marketing trip throughout OVER THE YEARS THAT I’VE BEEN INVOLVED IN
Europe. Most of his investors there tend TRANSPORTATION, IT’S NEVER BEEN A GOOD
to hold onto stocks for 12 months or YEAR TO BE A TRUCK DRIVER. RIGHT? IT’S ALWAYS
more, and they don’t find transporta-
tion stocks compelling. GOING TO BE A TOUGH JOB, AND I THINK THE
“No one wants to buy transporta- GOVERNMENT’S JUST MAKING IT THAT MUCH
tion stocks over in Europe right now, TOUGHER AS THE DAY GOES BY.
and they just see the deceleration in the
economy, and they’re a little bit wor- —JASON SEIDL, COWEN GROUP
ried,” he said. “I can’t say I blame them.
I think there is a lack of a catalyst in
the near term, but as we move through-
out the back half of the year, there’s a percent, is now tracking just below 2 ing rates,” he said. “I see them holding
lot of things going on for the group.” percent and will continue to grow slowly. up. As we talked about the LTLs being
The future looks better for asset- Second, the intermodal market an oligopoly, the railroads as I always
based companies such as motor car- faces challenges. Freight is coming off like to say on their worst day can be a
riers than it does for non-asset-based the railroads and shifting back to the duopoly. On their best day they can be
companies such as freight brokers and highways, even in nontraditional long- a monopoly. And that’s why these guys
forwarders, he said. That’s because non- distance lanes. Railroads are shipping are holding up a lot better.”
asset-based companies tend to do better less commodities and less coal, which The news, however, is not as good
in a slow economy when investors are they are looking to replace. The rail for intermodal companies.
looking for something safe. Because companies have spent billions of dol- “If you’re an intermodal player
transportation companies compose lars during the last few years on their right now on the demand front, there’s
only 2.8 percent of the S&P 500, inves- networks, mostly for intermodal infra- not a lot of good things working for you
tors don’t put their money into a lot of structure. They also are reducing costs other than maybe, say, railroad perfor-
them. When the economy is growing and, in the case of Norfolk Southern, mance numbers,” he said. “Right now
— which it is — investors look for better removing perhaps 1,000 miles of track. we have cheap diesel prices, we have
returns, which asset-based companies However, because they believe the ample truck capacity out there, and
can provide. shift to truck transport is “largely tran- declining truck rates. Other than that,
As a result, he said, “I think you sitory in nature,” pricing has continued everything looks good.”
could see some of that money flow from to increase, he said. A first quarter sur- Other concerns? The decelera-
the non-asset-based side to the asset- vey of shippers showed they expected tion of the Chinese economy is hurt-
based side before the end of the year.” rail prices to increase 2.9 percent over ing American manufacturing, as is the
the next 6-12 months — the smallest strong dollar, which makes American
THE RAIL EFFECT expected increase since the first quarter exports more expensive. Inventory levels
In addition to trucking, Seidl covers of 2009, but an increase nonetheless. are high, in part because a very mild
the rail sector, where carloads had been He agrees with that assessment and winter left retailers stuck with a lot of
falling by double digits in the second doesn’t expect rail inflation to increase winter-based goods, so they are curtail-
quarter. The slowdown is occurring for much more. ing purchases of their next lines. His
two reasons. First, automotive hauling, “Generally your truck competitive firm’s models indicate diesel prices will
which was tracking upwards almost 9 business, I don’t see the railroads slash- increase somewhat next year. ATR

ARKANSAS TRUCKING REPORT | Issue 3 2016 39