Logistics stocks slide due to demand concerns
Several major logistics and transportation company stocks have fallen sharply this week amid lower-than-expected earnings announcements and concerns of weak demand going into the fourth quarter.Several major logistics and transportation company stocks, including UPS, FedEx, and C.H. Robinson have fallen sharply in the past week in response to some lower-than-expected earnings announcements and concerns of weak demand going into the fourth quarter.
Shares of UPS had fallen 3.9 percent to $102.63 as of close of business Wednesday compared to last Friday’s closing price of $106.84. The parcel and logistics giant reported flat revenues and lower package volumes in the third quarter of 2015 compared with the same period the previous year.
Stock in FedEx, UPS’s primary competitor, dipped 2.8 percent, from $159.63 per share on Friday to $155.24 per share at Wednesday’s close, despite projecting a 12.4 percent year-over-year increase in seasonal package volumes in the fourth quarter.
Third-party logistics provider C.H. Robinson’s shares were down 6.6 percent to $67.99 during the same time period, but have rebounded slightly in early morning trading after posting positive earnings results yesterday. The company reported profits grew 11.6 percent to $139.4 million in the third quarter, despite revenues falling 1.4 percent to $3.4 billion compared to third quarter 2014.
Other notable losers included acquisition-heavy 3PLs XPO Logistics, which closed down 11 percent to $25.21 per share on Wednesday, and Echo Global Logistics, which was down 23.2 percent to $16.65 but rebounded in early morning trading today as it opened at $20.79.
Several major U.S. railway stocks have dropped over the course of the week as well, including CSX, down 3.8 percent to $27.30 per share, Union Pacific, down 7.1 percent to $90.10, and Kansas City Southern, down 2.9 percent to $83.59, as of Wednesday’s close.
The U.S. Census Bureau announced Tuesday new orders for manufactured durable goods, considered a key indicator in the transportation sector and the overall U.S. economy, fell for a second straight month in September. U.S. durable goods orders fell 1.2 percent to $231.1 billion for the month following a revised decrease of 3 percent in August.
New orders for transportation equipment, also down for the second consecutive month, were a primary driver in the overall decrease, dropping 2.9 percent to $75.5 billion after a 5.8 percent decline the previous month.
The Dow Jones Transportation Average, a U.S. stock market index that calculates a running average of the share prices of twenty major transportation corporations, has slipped 2.75 percent from Friday, closing at $8,068.92 Wednesday. The DJTA is oldest stock index still in use and the most widely recognized gauge of the American transportation sector.