Transportation - Trucking: US Supreme Ct/Montomery: The brokerage landscape changed today…Adapt or die…

Research evidence excerpt

Transportation - Trucking: US Supreme Ct/Montomery: The brokerage landscape changed today…Adapt or die…

nal or

Unsatisfactory. The rating simplicity excludes the fact that a review is not mandatory, is

sporadic, and ratings are infrequent, episodic, and sometimes outdated.

Super-accelerant to the Truckload market recovery

In a market that is already seeing rapid removal of capacity, aided by the

Administration’s focus on eliminating non-domiciled commercial drivers’ licenses (CDL’s;

where the FMCSA has already revoked 28,000 of the approximate 200,000 existing non-

domiciled CDL’s; in a market of ~3m-4m CDLs, or ~1% of drivers), enforcing English

Language Proficiency, eliminating non-compliant electronic logging devices, and

shutting down fake driving schools, this case is set add a ‘propane tank to the fire’ of

removing capacity. No longer will small brokers be able to tender freight to carriers with

poor safety records. This should lead to the consolidation in the brokerage industry, and

usage of higher quality trucking companies. The acceleration of the capacity reduction

will enhance truck spot pricing. Prior to this decision, Freighwaves noted spot rates had

jumped to $3.40/mile this week, nearing the COVID peak of 2021, due to road check

week (when many carriers stay home rather than have their trucks spot inspected).

Stay strong Truck/Intermodal (& large brokers over time)

We reiterate our Buys on Truckload/multi-modal carriers Knight-Swift (KNX) and

Schneider National (SNDR), Intermodal/-modal carrier J.B. Hunt Transport Services

(JBHT), Less-than-truckload carriers (LTL’s) XPO (XPO) and TFI Int’l (TFII), and keep a

watch on non-buy rated LTL carriers ODFL, SAIA, ARCB, and dedicated trucker WERN.

Additionally, we reiterate our Buy on C.H.