Transport Takes: What We Learned -- Shippers, Brokers, & Investor Debates

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Transport Takes: What We Learned -- Shippers, Brokers, & Investor Debates

export coal) than do other modes of

Freight Transports. CSX also has exposure to consumer end markets owing to its intermodal

business. We do not expect major regulatory or legislative changes in Canada or the U.S., but

incremental changes in rail regulation could affect the pace of pricing gains that CSX can

realize.

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

EXPD’s operating margin and EPS performance. The international freight forwarding markets

are highly competitive, but an easing in competitive pressures is a source of potential upside

risk.

JBHT: Our price target is based on a multiple of EPS. The most significant driver of growth for