Transport Takes: TL Spot -- Where to From Here? Thoughts on the Decline in Transports; EXPD & Labor Productivity

研报英文原文证据摘录

Transport Takes: TL Spot -- Where to From Here? Thoughts on the Decline in Transports; EXPD & Labor Productivity

source of risk to both our

volume growth assumptions and also our operating margin forecasts. This translates to risk to

our EPS forecasts and also to our price target for UPS stock. In our view, significant changes in

logistics strategy by large eCommerce companies are sources of risk to pricing and B2C

volumes for UPS. UPS has fuel surcharge mechanisms which offset most of the volatility in

fuel prices. Nevertheless, we believe there is a benefit to their business from lower fuel prices

and a risk from potential moves up in fuel prices.

EXPD: Our price target is based on a multiple of EPS. EXPD’s primary services are facilitation of

international airfreight and ocean movements of freight and provision of customs brokerage

and local transport services connected to the international moves. As a result, EXPD's growth

is sensitive to the pace of growth in international airfreight and ocean container moves. Faster

global economic growth than we currently anticipate – accompanied by stronger growth in

global trade than we currently anticipate – is an upside risks to EXPD's markets, its growth

and EPS, and our price target. As an intermediary, EXPD also passes along changes in

airfreight and ocean container capacity costs; so if these markets loosen and prices fall quickly

(separate from changes in demand growth) this could also cause upside to our EPS estimates

and our price target for EXPD. While EXPD does not own the transport assets (planes, ships,

etc.), it does have operating leverage in terms of its labor, facilities, and G&A costs. As a result,

faster growth in net revenue than we currently anticipate could cause upside pressure on