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PHOTO: Jon D. Kennedy


Jason Seidl, left at podium, speaks at the ATA Annual Conference


attitude matches his client base, which is not interested in buying at the moment. Seidl said he recently returned from a marketing trip throughout Europe. Most of his investors there tend to hold onto stocks for 12 months or more, and they don’t find transporta- tion stocks compelling. “No one wants to buy transporta-


tion stocks over in Europe right now, and they just see the deceleration in the economy, and they’re a little bit wor- ried,” he said. “I can’t say I blame them. I think there is a lack of a catalyst in the near term, but as we move through- out the back half of the year, there’s a lot of things going on for the group.” The future looks better for asset-


based companies such as motor car- riers than it does for non-asset-based companies such as freight brokers and forwarders, he said. That’s because non- asset-based companies tend to do better in a slow economy when investors are looking for something safe. Because transportation companies compose only 2.8 percent of the S&P 500, inves- tors don’t put their money into a lot of them. When the economy is growing —which it is—investors look for better returns, which asset-based companies can provide. As a result, he said, “I think you


could see some of that money flow from the non-asset-based side to the asset- based side before the end of the year.”


THE RAIL EFFECT In addition to trucking, Seidl covers


the rail sector, where carloads had been falling by double digits in the second quarter. The slowdown is occurring for two reasons. First, automotive hauling, which was tracking upwards almost 9


ARKANSAS TRUCKING REPORT | Issue 3 2016


OVER THE YEARS THAT I’VE BEEN INVOLVED IN TRANSPORTATION, IT’S NEVER BEEN A GOOD


YEAR TO BE A TRUCK DRIVER. RIGHT? IT’S ALWAYS GOING TO BE A TOUGH JOB, AND I THINK THE GOVERNMENT’S JUST MAKING IT THAT MUCH TOUGHER AS THE DAY GOES BY.


—JASON SEIDL, COWEN GROUP


percent, is now tracking just below 2 percent and will continue to grow slowly. Second, the intermodal market


faces challenges. Freight is coming off the railroads and shifting back to the highways, even in nontraditional long- distance lanes. Railroads are shipping less commodities and less coal, which they are looking to replace. The rail companies have spent billions of dol- lars during the last few years on their networks, mostly for intermodal infra- structure. They also are reducing costs and, in the case of Norfolk Southern, removing perhaps 1,000 miles of track. However, because they believe the


shift to truck transport is “largely tran- sitory in nature,” pricing has continued to increase, he said. A first quarter sur- vey of shippers showed they expected rail prices to increase 2.9 percent over the next 6-12 months—the smallest expected increase since the first quarter of 2009, but an increase nonetheless. He agrees with that assessment and doesn’t expect rail inflation to increase much more. “Generally your truck competitive business, I don’t see the railroads slash-


ing rates,” he said. “I see them holding up. As we talked about the LTLs being an oligopoly, the railroads as I always like to say on their worst day can be a duopoly. On their best day they can be a monopoly. And that’s why these guys are holding up a lot better.” The news, however, is not as good


for intermodal companies. “If you’re an intermodal player


right now on the demand front, there’s not a lot of good things working for you other than maybe, say, railroad perfor- mance numbers,” he said. “Right now we have cheap diesel prices, we have ample truck capacity out there, and declining truck rates. Other than that, everything looks good.” Other concerns? The decelera-


tion of the Chinese economy is hurt- ing American manufacturing, as is the strong dollar, which makes American exports more expensive. Inventory levels are high, in part because a very mild winter left retailers stuck with a lot of winter-based goods, so they are curtail- ing purchases of their next lines. His firm’s models indicate diesel prices will increase somewhat next year. ATR


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