Industry Overview - The Zacks Transportation-Services industry is facing challenges due to weak freight rates, high inflation, and supply-chain disruptions, compounded by tariff uncertainties and geopolitical tensions [1][2][4]. - Companies in this industry provide transport, logistics, leasing, and maintenance services, with a direct correlation to economic health [3]. Current Trends - Freight demand remains weak, with the Cass Freight Shipments Index declining by 7.6% year over year in November, marking a continuous decline for nine months [4]. - Rising cost pressures, including labor shortages and increased maintenance costs, are eroding profit margins, with ongoing inflation potentially narrowing margins further [5]. - The U.S. Federal Reserve's recent interest rate cuts may provide some relief by lowering borrowing costs and potentially boosting economic growth [6]. Industry Performance - The Zacks Transportation-Services industry ranks 166 out of 243 Zacks industries, placing it in the bottom 32% [7][8]. - The industry's earnings outlook is negative, with a 28.3% year-over-year decrease in aggregate earnings estimates for 2026 [9]. - Over the past year, the industry has underperformed the S&P 500, gaining only 3.3% compared to the S&P 500's 16.9% increase [12]. Valuation Metrics - The industry is currently trading at a forward price-to-sales ratio of 1.46X, significantly lower than the S&P 500's 5.6X and slightly above the sector's 1.31X [15]. Notable Companies - **Expeditors International of Washington (EXPD)**: A leading third-party logistics provider with a Zacks Rank of 1 (Strong Buy). Despite weak volumes, cost-cutting measures are positively impacting earnings, which have beaten estimates by an average of 13.9% over the last four quarters [18][19]. - **ZTO Express (Cayman) (ZTO)**: A major express delivery player in China, also holding a Zacks Rank of 1. The company has a long-term earnings growth expectation of 3.1% [22][23]. - **C.H. Robinson Worldwide (CHRW)**: An asset-light logistics player with a Zacks Rank of 3 (Hold). The company has consistently surpassed earnings estimates, with an average beat of 10.4% over the last four quarters [26].

Core Insights - The Zacks Transportation-Services industry is currently facing significant challenges due to low freight rates, high inflation, and ongoing supply-chain disruptions, compounded by tariff-related uncertainties and geopolitical issues [1][4][6]. Industry Overview - The Zacks Transportation-Services industry encompasses companies that provide transportation, logistics, leasing, and maintenance services, with a focus on global logistics management and third-party logistics solutions [3]. - The health of this industry is closely tied to the overall economy, with improvements in manufactured and retail goods, pricing, and global economic conditions benefiting industry participants [3]. Current Trends - **Freight Downturn**: The Cass Freight Shipments Index has declined by 9.3% year over year in August, indicating a persistent downturn in freight demand [4]. - **Cost Pressures**: The industry is experiencing rising cost pressures due to labor shortages and increased expenses for equipment and services, which are eroding profit margins [5]. - **Tariff Turmoil**: Protectionist tariff policies are reshaping the industry by increasing costs and disrupting supply chains, leading to uncertainties for investors [6]. - **Fed Rate Cuts**: The U.S. Federal Reserve's recent interest rate cut of 25 basis points may provide relief by lowering borrowing costs for transportation service providers [7]. Industry Performance - The Zacks Transportation-Services industry ranks 210 out of 243 Zacks industries, placing it in the bottom 14% and indicating dismal near-term prospects [8][9]. - The industry has underperformed compared to the S&P 500 and the broader Transportation sector, declining by 13.4% over the past year, while the S&P 500 has appreciated by 18.3% [11]. Valuation Metrics - The industry is currently trading at a forward price-to-sales ratio of 1.3X, significantly lower than the S&P 500's 5.42X and the sector's 1.51X [14]. Notable Companies - **Expeditors International of Washington (EXPD)**: Currently holds a Zacks Rank 3 (Hold) and has consistently beaten earnings estimates, although it faces challenges from weak volumes and declining rates [18]. - **C.H. Robinson Worldwide (CHRW)**: Also holds a Zacks Rank 3, with strong cost control measures and a positive liquidity position, having surpassed earnings estimates consistently [22]. - **Matson (MATX)**: Headquartered in Honolulu, MATX carries a Zacks Rank 3 and has implemented effective cost-management actions, achieving earnings beats in three of the last four quarters [25].

Industry Overview - The Zacks Transportation-Services industry is currently facing challenges such as dull freight rates, high inflation, and ongoing supply-chain disruptions, along with tariff-related uncertainties and geopolitical issues [1][4][7] - Companies in this industry provide logistics, leasing, and maintenance services, focusing on global logistics management and third-party logistics solutions [3] Current Trends - Supply-chain disruptions and weak freight rates continue to negatively impact the industry, with the Cass Freight Shipments Index declining by 2.4% year over year in June, marking a deterioration for 11 consecutive months [4] - The industry is experiencing significant inflation, particularly in labor and freight costs, prompting companies to implement cost-cutting measures to improve productivity and efficiency [5] - Despite economic recovery, the industry's earnings outlook is negative, with a 31.2% decrease in earnings estimates for 2025 since August 2024 [10] Financial Performance - The Zacks Transportation-Services industry has underperformed the S&P 500, declining by 12.8% over the past year, while the S&P 500 appreciated by 12.2% [12] - The industry is currently trading at a forward price-to-sales ratio of 1.32X, significantly lower than the S&P 500's 5.26X and the sector's 1.45X [15] Company Highlights - Expeditors International of Washington (EXPD) has a Zacks Rank 2 (Buy) and has consistently beaten earnings estimates by an average of 13.3% over the last four quarters, despite facing weak volumes [17] - C.H. Robinson Worldwide (CHRW) holds a Zacks Rank 3 (Hold) and has surpassed earnings estimates by an average of 14.5% in the past four quarters, with a strong liquidity position [21] - Matson (MATX), also with a Zacks Rank 3, has implemented effective cost-management actions and has beaten earnings estimates in three of the last four quarters, with an average beat of 9.7% [24]