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What We See Around the Bend for 3 Logistics Providers

Investors should stay tuned for attractive entry points for these high-quality logistics stocks.

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Matthew Young: In 2018, the unprecedented truckload-industry capacity crunch drove significant spot-freight opportunities to the asset-light truck brokers, bolstering both their pricing power and gross margins. The large providers we cover, including C.H. Robinson and Landstar, posted impressive 20%-plus gross and net revenue expansion in 2018. Truck brokers tend to do very well during periods of disruption because of their broad capacity relationships with small carriers. Recall, brokers don’t own equipment but rather buy capacity from asset-based truckers in the spot market and resell it to shippers for a spread.

However, 2019 ushered in an entirely different narrative, as the operating backdrop has gone from boom to bust. In short, the capacity crunch dissipated, and the truckload supply and demand balance has become quite loose for several reasons, including a pullback in freight demand.

Matthew Young does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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