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3 Transport-Service Stocks to Monitor Despite Industry Headwinds
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The Zacks Transportation-Services industry is operating in a difficult environment, pressured by weak freight rates, persistently high inflation and ongoing supply-chain disruptions. Adding to these headwinds are tariff-related uncertainties and geopolitical tensions, which continue to pose significant challenges for the industry.
However, despite these near-term concerns, there is an underlying case for long-term optimism. Supported by strong fundamentals, companies such as Expeditors International of Washington (EXPD - Free Report) , C.H. Robinson Worldwide (CHRW - Free Report) and ZTO Express (Cayman) (ZTO - Free Report) appear well-positioned to navigate current obstacles and capitalize on opportunities when industry conditions improve.
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.
3 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 7.6% year over year in November. This measure has deteriorated year over year each of the past nine 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.
Fed Rate Cuts May Signal Some Relief: In December, the U.S. Federal Reserve cut interest rates for the third time in 2025. The 25-basis-point rate cut signals a further shift toward monetary easing. The rate cuts in the past year imply 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 17-stock group within the broader Zacks Transportation sector. The industry currently carries a Zacks Industry Rank #166, which places it in the bottom 32% 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 outperform 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 2026 has decreased 28.3% year over year.
Before we present a few stocks from the industry that you may want to retain or buy, let’s take a look at the industry’s recent stock market performance and the valuation picture.
Industry Lags the S&P 500 but Outperforms Sector
The Zacks Transportation-Services industry has underperformed the Zacks S&P 500 composite while marginally surpassing the broader Transportation sector in a year.
The industry has improved 3.3% over this period compared with the S&P 500's appreciation of 16.9% and the broader sector’s uptick of 1.3%.
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 1.46X compared with the S&P 500's 5.6X. The value is higher than the sector's trailing 12-month P/S of 1.31X.
Over the past five years, the industry has traded as high as 3.01X, as low as 1.38X and at the median of 1.92X.
Price-to-Sales Ratio (F12M)
3 Transport Services Stocks to Keep an Eye on Now
Expeditors, a leading third-party logistics provider, is based in Seattle, WA. It currently sports a Zacks Rank# 1 (Strong Buy). EXPD’s earnings beat the Zacks Consensus Estimate in each of the last four quarters by an average of 13.9%.
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.
ZTO Express is a leading player in the field of express delivery in China. This Shanghai-based company went public in 2016. ZTO Express and its network partners provide domestic and international express delivery services. Other value-added services supplement the offerings. In China, it mainly focuses on providing express deliveries of parcels, which mostly weigh below 50 kilograms. The expected delivery time ranges from 24 hours to 72 hours.
ZTO Express sports a Zacks Rank #1. The company has a long-term earnings growth expectation of 3.1.
Price and Consensus: ZTO
C.H. Robinson, currently carrying a Zacks Rank #3 (Hold), 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’s earnings have surpassed the Zacks Consensus Estimate in each of the past four quarters. The average beat is 10.4%.
Price and Consensus: CHRW
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3 Transport-Service Stocks to Monitor Despite Industry Headwinds
The Zacks Transportation-Services industry is operating in a difficult environment, pressured by weak freight rates, persistently high inflation and ongoing supply-chain disruptions. Adding to these headwinds are tariff-related uncertainties and geopolitical tensions, which continue to pose significant challenges for the industry.
However, despite these near-term concerns, there is an underlying case for long-term optimism. Supported by strong fundamentals, companies such as Expeditors International of Washington (EXPD - Free Report) , C.H. Robinson Worldwide (CHRW - Free Report) and ZTO Express (Cayman) (ZTO - Free Report) appear well-positioned to navigate current obstacles and capitalize on opportunities when industry conditions improve.
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.
3 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 7.6% year over year in November. This measure has deteriorated year over year each of the past nine 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.
Fed Rate Cuts May Signal Some Relief: In December, the U.S. Federal Reserve cut interest rates for the third time in 2025. The 25-basis-point rate cut signals a further shift toward monetary easing. The rate cuts in the past year imply 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 17-stock group within the broader Zacks Transportation sector. The industry currently carries a Zacks Industry Rank #166, which places it in the bottom 32% 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 outperform 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 2026 has decreased 28.3% year over year.
Before we present a few stocks from the industry that you may want to retain or buy, let’s take a look at the industry’s recent stock market performance and the valuation picture.
Industry Lags the S&P 500 but Outperforms Sector
The Zacks Transportation-Services industry has underperformed the Zacks S&P 500 composite while marginally surpassing the broader Transportation sector in a year.
The industry has improved 3.3% over this period compared with the S&P 500's appreciation of 16.9% and the broader sector’s uptick of 1.3%.
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 1.46X compared with the S&P 500's 5.6X. The value is higher than the sector's trailing 12-month P/S of 1.31X.
Over the past five years, the industry has traded as high as 3.01X, as low as 1.38X and at the median of 1.92X.
Price-to-Sales Ratio (F12M)
3 Transport Services Stocks to Keep an Eye on Now
Expeditors, a leading third-party logistics provider, is based in Seattle, WA. It currently sports a Zacks Rank# 1 (Strong Buy). EXPD’s earnings beat the Zacks Consensus Estimate in each of the last four quarters by an average of 13.9%.
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 stocks here.
Price and Consensus: EXPD
ZTO Express is a leading player in the field of express delivery in China. This Shanghai-based company went public in 2016. ZTO Express and its network partners provide domestic and international express delivery services. Other value-added services supplement the offerings. In China, it mainly focuses on providing express deliveries of parcels, which mostly weigh below 50 kilograms. The expected delivery time ranges from 24 hours to 72 hours.
ZTO Express sports a Zacks Rank #1. The company has a long-term earnings growth expectation of 3.1.
Price and Consensus: ZTO
C.H. Robinson, currently carrying a Zacks Rank #3 (Hold), 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’s earnings have surpassed the Zacks Consensus Estimate in each of the past four quarters. The average beat is 10.4%.
Price and Consensus: CHRW