QI TAKEAWAY — Trucking and railroads are facing logistical headwinds while indicating tailwinds to pricing. As long as the slowdown proves temporary, higher inflation should continue to support long positions.
- Per data from the Association of American Railroads, intermodal trailer traffic, a proxy for truck output, downshifted from double-digit expansion to contraction from June to October; a driver shortage, as well as a lack of chassis at ports, are impeding trucking industry growth
- Every month since March has seen average weekly hours in truck transportation at or above prior record highs; despite the PPI for truck transportation posting YoY prints in the teens since April of this year, the S&P 500: Trucking continues to post elevated annual returns
- Rail traffic has been down YoY since September, driven by intermodal containers rather than traditional rail carloads; however, given the S&P:500 Railroads has posted double-digit YoY gains since August 2020, investors seem to view any slowdown in activity as temporary
