2Q26 Quarterly Transportation Packet

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2Q26 Quarterly Transportation Packet

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Takeaways Into Earnings Client logo goes here

SUMMARY

• We expect bullish commentary from TL carriers in Q2, driven by continued momentum on the

supply side due to regulatory enforcement. Carriers are seeing stable demand with early positive

reads on peak season. Transport valuations limit material upside surprises in our view and look for

core demand (for both retail and industrial) improvements for next leg of earnings momentum. We

are beginning to hear early signs of optimism surrounding peak season, "this may be the first real

peak season since 2021". An acceleration of imports has suggested some incremental strength;

the Executive Director of the PoLA attributed the growth to inventory replenishment, concerns

about fuel costs, trade policy uncertainty, and preparing for peak season.

• Our predictive AFS freight index offers a first look into 3Q rates. TL rates are expected to increase

to their highest level in four years, though MPS fell sequentially due to modal shift on longer haul

lanes. LTL is expected to set another record in Q3, AFS currently sees Amazon's presence in the

LTL market as nascent.

• We raised estimates above consensus for CSX, NSC, and UNP. Industrial strength has picked up in

Q2, with channel checks indicating an acceleration of demand through Spring across a wide

range of industrial categories. We expect strong intermodal numbers for the Class Is and IMCs.

The UNP/NSC merger application was accepted by the STB in late May though the Board paused

proceedings (via an abeyance) and directed applicants to file more comprehensive data by 7/27

relating to competitive impacts and divestiture of certain assets. The applicants recently