Broken Moats
Family-Office Long/Short Research, Variant Perception
Trucking and freight brokerage stocks look extended and expensive, pricing in an improbably steep earnings ramp. CDL licensing is tightening capacity and AI capex buildouts help areas such as flatbed, but J.B. Hunt trades near 30x next year's earnings. XPO is the most egregious, as less-than-truckload carriers will lag the upcycle while adding capacity. Landstar faces weak brokerage margins and platform pressure versus other public brokerages, before AI's effect on take rates. x.com
J.B. Hunt, a best-in-class trucking business, appears to have run out of the pricing power needed to pass high diesel costs on to customers. It announced an earnings drop of 5% to 10% because of rising fuel costs. Diesel is approaching $7 a gallon, which is more bearish than the recent move in yields, with consumers and businesses paying roughly $700M more a day for fuel than a year ago. x.com
Old Dominion and Saia look well placed as solid-balance-sheet LTL consolidators: such periods have historically been good for them, and FOX reports trucking bankruptcies amid surging diesel costs. At current valuations, they look roughly equally attractive. x.com x.com
Legitimate trucking companies like J.B. Hunt should start making a lot of money as enforcement pushes noncompliant drivers off the road. Per a quoted trucking post, DOT emergency-closed 110 CDL schools tied to 5,000 drivers who failed roadside English checks, with 160-plus more at risk, and trucks abandoned by drivers are being impounded. x.com
FedEx Freight has significant upside on even a partial re-rating toward Old Dominion and Saia, as onshoring construction drives LTL demand. If housing reverts, demand could really amp up. Diesel costs are a concern, though FedEx Freight can add surcharges or raise rates in near real time, unlike garbage haulers Republic Services and Waste Management, which are locked into long-term municipal contracts. Tax-loss selling is the other risk, and the near term is hard to call. x.com
FedEx should get a good tailwind from falling oil after an excellent earnings report last week, making it a decent setup given the market. x.com
Aurora could become the platform for driverless trucks, with its market cap able to rise 4-5x or more if it executes. It runs the only fully driverless trucks operating commercially at scale on a major US interstate, hauling freight for a Berkshire company on live Texas lanes, with ample cash to scale. Revenue should go from about $15M this year to about $190M next as the fleet grows, then a capital-light model should lift margins. A reply notes freight carriers still keep drivers in cabs. x.com … Show more
CSX could get a boost as high oil prices push logistics from trucks toward trains. x.com
Amazon's new Supply Chain Services is an AWS moment that favors Amazon over UPS and FedEx. Amazon is opening the logistics network it built for itself, over 100 cargo planes, 80,000 trailers, 24,000 intermodal containers and a 30-year warehouse network with AI forecasting, to all businesses, starting with P&G, 3M and American Eagle. UPS and FedEx saw this coming for years and did almost nothing, making it a Blockbuster-versus-Netflix moment for logistics. x.com x.com
