As if they had read Mark Mongague's blog post about trucking trends and a sluggish economy, the Wall Street Journal predicted a consumer rebound in time for the Christmas retail season. (Hat tip: Stephen H., who subscribes to the DAT Carrier News.) The article, posted last week in the "Heard on the Street" section, offered this bit of guarded optimism for investors in transportation stocks:
So while the outlook for retailers heading into the holidays appears to have brightened, some of the biggest beneficiaries could be companies like the truckers moving goods from West Coast docks to store floors, as well as express shippers such as FedEx (FDX -0.65%) and United Parcel Service (UPS -0.08%.) And bear in mind that while retail shares are having a very good year, transportation stocks have been dinged by the global slowdown Investors looking to do a little holiday shopping might want to fill their stockings with more than just retail shares.
Mark had observed in the previous week that Asian imports were late to arrive at West Coast ports, and that the surge in traffic was short-lived. The Wall Street Journal writer, however, expects that recent improvements in consumer confidence and purchases will encourage retailers to make last-minute additions to their Christmas inventory. So far, we haven't seen evidence in the spot freight market, as both volume and rates are down for vans. Reefer rates are up, so we can deduce that stores will be well stocked for Thanksgiving.
There has been a growing trend toward gift card purchases at the holiday season, which can shift some of the holiday inventory turnover out to January or later, when the cards are redeemed. That may help cautious retailers, and offer trucking companies a welcome blast of freight during the off-season in December and January. Meanwhile, events in the coming weeks may affect purchasing activity for the rest of Q4 and beyond. It's difficult to predict how consumer confidence and spending may be influenced by Hurricane Sandy and the national election, to name two looming examples. We'll see how it all plays out.
Santa's Got a Semi (Copyright 2002, Sterling Music)