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3 Transport-Service Stocks to Keep an Eye on Amid Industry Hiccups
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The Zacks Transportation-Services industry faces a challenging backdrop, weighed down by dull freight rates, high inflation and lingering supply-chain disruptions. The tariff-related uncertainty and geopolitical woes represent further challenges for this key industry.
Yet, beneath the gloom lies a glimmer of long-term promise. Driven by solid fundamentals, companies like Expeditors International of Washington (EXPD - Free Report) , C.H. Robinson Worldwide (CHRW - Free Report) and Matson (MATX - Free Report) are highly likely to weather near-term challenges and seize opportunities as the cycle turns.
About the Industry
The companies belonging to the Zacks Transportation-Services industry offer transporters, logistics, leasing and maintenance services. Some industry players focus on the business of global logistics management, including international freight forwarding. Third-party logistics entities provide innovative supply-chain solutions. They also focus on services like product sourcing, warehousing and freight shipping. These companies have expertise in trucking, air and ocean transportation. Some players in this industry deliver domestic and international express delivery services. The well-being of the companies in this industrial cohort is directly proportional to the health of the economy. An uptick in manufactured and retail goods, favorable pricing and improvement in global economic conditions bode well for industry participants.
4 Trends Shaping the Future of the Transportation-Services Industry
Freight Downturn Persists: Although economic activities picked up from the pandemic gloom, lingering supply-chain disruptions continue to dent stocks in the industry. Below-par freight rates are also hurting the industry’s prospects. Highlighting the weak freight demand, the Cass Freight Shipments Index declined 9.3% year over year in August. This measure has deteriorated year over year in each of the last 12 months, which confirms the overall declining trend.
Rising Cost Pressures Erode Margins: The industry is grappling with persistent cost inflation, ranging from labor shortages to increased expenses for equipment and services. Maintenance costs are climbing at a time when commodity prices remain volatile, squeezing profitability for producers. Unless inflationary pressures ease, margins of the industry players could narrow further, leaving less flexibility for shareholder distributions or reinvestment.
Tariff Turmoil: A Key Headwind: The current administration is focused on protectionism that restricts international trade to help domestic industries. The U.S. administration’s tariff policies are reshaping the transportation service industry by increasing costs, disrupting supply chains, and influencing consumer behavior. The tariff turmoil is hurting global trade. Tariff-induced economic uncertainties and trade tensions may create uncertainty for investors interested in the industry.
Fed Rate Cuts May Signal Some Relief: In September, the U.S. Federal Reserve cut interest rates for the first time in the current year. The 25-basis-point rate cut signals a shift toward monetary easing. The Fed expects two more rate cuts by year-end. This is good news for Transportation service providers as lower interest rates bring down borrowing costs, boosting economic growth.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Transportation - Services industry is a 21-stock group within the broader Zacks Transportation sector. The industry currently carries a Zacks Industry Rank #210, which places it in the bottom 14% of 243 Zacks industries.
The group’s Zacks Industry Rank, the average of the Zacks Rank of all member stocks, indicates dismal near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. The industry's earnings estimate for 2025 has decreased by 23.1% since May 2025.
Before we present a few stocks from the industry that you may want to retain, let’s take a look at the industry’s recent stock market performance and the valuation picture.
Industry Lags S&P 500 and Sector
The Zacks Transportation-Services industry has underperformed the Zacks S&P 500 composite as well as the broader Transportation sector in a year.
The industry has declined 13.4% over this period against the S&P 500's appreciation of 18.3% and the broader sector’s drop of 9.6%.
One-Year Price Performance
Industry's Current Valuation
Based on the forward 12-month price-to-sales, a commonly used multiple for valuing transportation services stocks, the industry is currently trading at 1.3X compared with the S&P 500's 5.42X. The value is also lower than the sector's trailing 12-month P/S of 1.51X.
Over the past five years, the industry has traded as high as 2.93X, as low as 1.23X and at the median of 1.81X.
Price-to-Sales Ratio (F12M)
3 Transport Services Stocks to Monitor Now
Expeditors, a leading third-party logistics provider, is based in Seattle, WA. EXPD currently has a Zacks Rank #3 (Hold). EXPD beat the Zacks Consensus Estimate in each of the last four quarters by an average of 15.3%.
While weak volumes (concerning air-freight tonnage and ocean containers) stemming from soft demand and declining rates are hurting EXPD’s performance, efforts to cut costs in the face of demand weakness are driving the bottom line.
C.H. Robinson, currently carrying a Zacks Rank #3, operates as an asset-light logistics player. Efforts to control costs bode well for this freight broker. Measures to reward CHRW's shareholders bode well. CHRW’s liquidity position is encouraging, too.
CHRW surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters, the average beat being 11.8%.
Price and Consensus: CHRW
Matson: Headquartered in Honolulu, HI, Matson provides ocean transportation and logistics services. We are impressed by the cost-management actions taken by the company to drive its bottom line. Its efforts to reward its shareholders are also commendable.
MATX carries a Zacks Rank #3 currently. MATX beat the Zacks Consensus Estimate in three of the last four quarters and missed the mark once, with the average beat being 16%.
Price and Consensus: MATX
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3 Transport-Service Stocks to Keep an Eye on Amid Industry Hiccups
The Zacks Transportation-Services industry faces a challenging backdrop, weighed down by dull freight rates, high inflation and lingering supply-chain disruptions. The tariff-related uncertainty and geopolitical woes represent further challenges for this key industry.
Yet, beneath the gloom lies a glimmer of long-term promise. Driven by solid fundamentals, companies like Expeditors International of Washington (EXPD - Free Report) , C.H. Robinson Worldwide (CHRW - Free Report) and Matson (MATX - Free Report) are highly likely to weather near-term challenges and seize opportunities as the cycle turns.
About the Industry
The companies belonging to the Zacks Transportation-Services industry offer transporters, logistics, leasing and maintenance services. Some industry players focus on the business of global logistics management, including international freight forwarding. Third-party logistics entities provide innovative supply-chain solutions. They also focus on services like product sourcing, warehousing and freight shipping. These companies have expertise in trucking, air and ocean transportation. Some players in this industry deliver domestic and international express delivery services. The well-being of the companies in this industrial cohort is directly proportional to the health of the economy. An uptick in manufactured and retail goods, favorable pricing and improvement in global economic conditions bode well for industry participants.
4 Trends Shaping the Future of the Transportation-Services Industry
Freight Downturn Persists: Although economic activities picked up from the pandemic gloom, lingering supply-chain disruptions continue to dent stocks in the industry. Below-par freight rates are also hurting the industry’s prospects. Highlighting the weak freight demand, the Cass Freight Shipments Index declined 9.3% year over year in August. This measure has deteriorated year over year in each of the last 12 months, which confirms the overall declining trend.
Rising Cost Pressures Erode Margins: The industry is grappling with persistent cost inflation, ranging from labor shortages to increased expenses for equipment and services. Maintenance costs are climbing at a time when commodity prices remain volatile, squeezing profitability for producers. Unless inflationary pressures ease, margins of the industry players could narrow further, leaving less flexibility for shareholder distributions or reinvestment.
Tariff Turmoil: A Key Headwind: The current administration is focused on protectionism that restricts international trade to help domestic industries. The U.S. administration’s tariff policies are reshaping the transportation service industry by increasing costs, disrupting supply chains, and influencing consumer behavior. The tariff turmoil is hurting global trade. Tariff-induced economic uncertainties and trade tensions may create uncertainty for investors interested in the industry.
Fed Rate Cuts May Signal Some Relief: In September, the U.S. Federal Reserve cut interest rates for the first time in the current year. The 25-basis-point rate cut signals a shift toward monetary easing. The Fed expects two more rate cuts by year-end. This is good news for Transportation service providers as lower interest rates bring down borrowing costs, boosting economic growth.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Transportation - Services industry is a 21-stock group within the broader Zacks Transportation sector. The industry currently carries a Zacks Industry Rank #210, which places it in the bottom 14% of 243 Zacks industries.
The group’s Zacks Industry Rank, the average of the Zacks Rank of all member stocks, indicates dismal near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. The industry's earnings estimate for 2025 has decreased by 23.1% since May 2025.
Before we present a few stocks from the industry that you may want to retain, let’s take a look at the industry’s recent stock market performance and the valuation picture.
Industry Lags S&P 500 and Sector
The Zacks Transportation-Services industry has underperformed the Zacks S&P 500 composite as well as the broader Transportation sector in a year.
The industry has declined 13.4% over this period against the S&P 500's appreciation of 18.3% and the broader sector’s drop of 9.6%.
One-Year Price Performance
Industry's Current Valuation
Based on the forward 12-month price-to-sales, a commonly used multiple for valuing transportation services stocks, the industry is currently trading at 1.3X compared with the S&P 500's 5.42X. The value is also lower than the sector's trailing 12-month P/S of 1.51X.
Over the past five years, the industry has traded as high as 2.93X, as low as 1.23X and at the median of 1.81X.
Price-to-Sales Ratio (F12M)
3 Transport Services Stocks to Monitor Now
Expeditors, a leading third-party logistics provider, is based in Seattle, WA. EXPD currently has a Zacks Rank #3 (Hold). EXPD beat the Zacks Consensus Estimate in each of the last four quarters by an average of 15.3%.
While weak volumes (concerning air-freight tonnage and ocean containers) stemming from soft demand and declining rates are hurting EXPD’s performance, efforts to cut costs in the face of demand weakness are driving the bottom line.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: EXPD
C.H. Robinson, currently carrying a Zacks Rank #3, operates as an asset-light logistics player. Efforts to control costs bode well for this freight broker. Measures to reward CHRW's shareholders bode well. CHRW’s liquidity position is encouraging, too.
CHRW surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters, the average beat being 11.8%.
Price and Consensus: CHRW
Matson: Headquartered in Honolulu, HI, Matson provides ocean transportation and logistics services. We are impressed by the cost-management actions taken by the company to drive its bottom line. Its efforts to reward its shareholders are also commendable.
MATX carries a Zacks Rank #3 currently. MATX beat the Zacks Consensus Estimate in three of the last four quarters and missed the mark once, with the average beat being 16%.
Price and Consensus: MATX