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The Dow Jones Transportation Average, which tracks share prices of 20 major freight-moving companies, declined 13 percent in value from 29 March through 12 April, The Wall Street Journal reported.
Many investors see transportation stocks as leading indicators, losing value when business and consumer spending decline and often signaling a broad economic slowdown ahead.
The stock price of ocean shipper Matson Inc. has fallen 31 percent during the roughly two-week period and truck renter Ryder Systems is off 23 percent.
Inflation is forcing consumers to spend less, with energy costs soaking up a greater share of household budgets, analysts cited by the WSJ pointed out.
China’s spreading lockdowns also are slowing that country’s export economy, creating a new round of global shortages that will inflate prices at a time when the U.S. Federal Reserve will be raising interest rates, which could add additional obstacles to the economy’s expansion.
“Although we’ve seen supply chains mending over the last few months,” transportation stocks’ slowdown “is an indication that we’re not quite out of the woods yet,” BNY Mellon strategist Jake Jolly told the WSJ.
TRENDPOST: As we reported in “Consumer Spending Slows in February” (5 Apr 2022), high inflation, worsened by Russia’s war in Ukraine and Western sanctions, has already begun to crimp consumers’ spending.
That’s not necessarily a bad thing. As the saying goes, the cure for high prices is high prices.
TRENDPOST: To save costs, more companies are shifting from all-truck shipping to “intermodal” transport, which sends goods by rail for much of their trip, then loads them onto trucks for “last mile” delivery. Intermodal transport takes longer but is cheaper.
Intermodal sales at Arkansas-based J.B. Hunt Transport services shot up 36 percent during this year’s first quarter and now makes up almost half of the company’s business.