J.P. 摩根-美股交通运输与物流业2021年Q1预览：主题、常见问题和最佳选择-2021.5.13正文版.doc

North America Equity Research13 May 2021Transportation & Logistics1Q21 Review: Themes, FAQs and Top Picks. Focus:West Coast Port Fluidity, Spot/Contract Spread DebateTransports had a solid showing during 1Q21 earnings against a backdrop that there “wasn't much to do in the group” with weather a likely scapegoat for headline misses. Fundamentals were strong enough in most cases to offset the impact of weather and beat lowered expectations, but the stocks getting the most attention did it with core operations. Specifically, UPS moved the bar higher in U.S. Domestic margins while KNX and CHRW struggled to demonstrate the anticipated leverage. In a market that appears primed for a further pullback, we could turn more positive on UPS (leverage to our pricing power thesis), UNP (weak sentiment and slow growth) and WERN (dedicated + potential M&A). However, some patience is likely required so we recommend getting started with the summer reading list of rail M&A, autonomous trucking, XPOs spin, and parcel pricing power. In this note we are also ramping up our monitoring of high frequency, alternative data sources to put some perspective around the debate of whether or not the freight cycle has peaked and a negative inflection is ahead. We are monitoring Chase Card data for customer spending patterns in categories that impact freight rates and have seen a continued shift to services since our first analysis in January. We've also added daily and weekly West Coast port metrics, which suggest port and terminal fluidity has improved substantially and the peak of congestion might have come earlier than prior expectations for mid-summer. At this point we believe these data sets suggest the surface freight market is closer to peak than not and expect TL rate momentum will fade in late June. Highlights of key sector FAQs and themes are listed below with more details inside the note including: summaries of top picks FDX, NSC and TFII along with why we would avoid TL after the recent weather-fueled run (page 5), scorecard of 1Q21 stock calls (page 6), most frequently asked investor questions (pages 7-15), and key sector themes (pages 16-22).· FAQ #1: Where does sentiment stand across the group and specific stocks? We expect sentiment will pick back up on the transports, which was viewed as a sector with “not much to do” before 1Q21 earnings. There are several interesting stories and setups ahead but we dont think there will be a rush to add new positions in a softer market where it looks like we should exercise some patience. UPS is on our short list of stocks wed likely favor on a pullback as a beneficiary of the re-opening with multi-year pricing power. Rails ex-M&A are mostly out of favor but UNP looks more interesting as an inflation hedge after lagging the group substantially, even prior to M&A headlines. We also expect the debate on whether or not the freight market is at peak rate conditions will intensify and continue into the summer.· FAQ #2: Are we seeing any signs of easing congestion at the West Coast ports? Commentary throughout the quarter suggested fluidity at the ports of L.A. and Long Beach had improved from peak congestion in early March, which was the time of our expert call with the head of the Port of L.A. However, last week BNSF limited the number of containers that could be brought into its L.A. and Chicago terminals so we gathered high frequency, alternative data to take a closer look at port fluidity. Fewer ships at anchor, faster gate turns, and improving container movements all suggest fluidity gains ahead of prior expectations for congestion to remain until “mid-summer”. Forecasted import levels remain elevated so we expect better supply chain fluidity will lower port operating costs and be one less upward force on rates.· FAQ #3: Can spot truckload prices stay above contract rates through 2021? The debate on how long truckload markets will remain tight continued throughAirfreight & SurfaceTransportationBrian P. Ossenbeck, CFA AC(1-212) 622-1023brian.p.ossenbeckBloomberg JPMA OSSENBECK <GO>J.P. Morgan Securities LLCKellen J Curry(1-212) 622-0717 kellen.j.curry J.P. Morgan Securities LLCMatt V Fallon(1-212) 622-6431 matt.v.fallon J.P. Morgan Securities LLCShreshth Mahajan(91-22) 6157 3055 shreshth.mahajan J.P. Morgan India Private LimitedSee page 23 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.Brian P. Ossenbeck, CFANorth America Equity Research(1-212) 622-102313 May 2021brian.p.ossenbeckearnings season with several publicly traded carriers and brokers making the case for a prolonged “spot above contract" environment, with some calling for it to continue through 2021 and into 2022. While just about anything seems possible in this freight market, this view seems unlikely since spot topped contract 9 months ago and historically it can last 12 months, which aligns with the annual RFP process. Starting on page 11 we outlined factors that could support either side of the argument as this discussion will continue in 2Q21. Our data shows spot dropped below contract already in April and we remain more cautious on rate momentum.· FAQ #4: Where are earnings yield spreads (risk premiums) versus history? With market sentiment focused more on shrinking equity risk premiums, we updated our framework to calculate the risk premium for each group in our coverage compared to the respective long-term average. Truckers and brokers screened cheap vs. the average but not cheap enough at this point of the cycle for us, unlike early February 2021 we see more risk of decelerating rates in the months ahead. Rail risk premiums were tight vs. history even prior to recent M&A and the parcels are now back to the long-term average. With this backdrop we are hesitant to embed any further multiple expansion and would put a premium on positive earnings revisions, which we still see as most likely with FDX and UPS over the next several years.· FAQ #5: Could Mexico's proposed law impact current rail concessions? Mexico's next legislative session in September could include a measure to decrease the amount of time a rail concession can last from 50 to 30 years and to periodically set a ceiling on the maximum price that operators can charge. The new proposal would apply to concessions when they expire or are renewed; it will not be retroactive. While railroads currently register rates the new rule would require companies to register their prices two years in advance and continue to do so every two years thereafter. The overall pricing framework is unclear at this point but any potential impact on pricing would depend heavily on the underlying details and scope of the proposed requirement before we could draw any definitive conclusions.· Theme #1: Chase Card data shows discretionary & service spend accelerating. Spot truckload rates have jumped and then held steady in the last three months, which we attribute to weather related disruptions given the spending on goods and essential services stabilized over the same timeframe. The broader discretionary spending category has jumped +25% since the start of the year and while the non-discretionary components have kept up in absolute spend, it is now at the peak of the dataset from March 2020. We could see non-discretionary spend still increase throughout the year, but the rate of change has clearly slowed with rebalancing consumer wallets and stimulus payments likely favoring services over goods. The net result is likely a gradually fading tailwind for truckload freight demand.· Theme #2: NS has some room to improve overtime utilization versus peers. As volumes come back we remain watchful on how rails balance labor additions and volume demands through headcount levels and overtime usage. Based on the latest data CSX and UP reduced headcount sharply in 2Q20 but have kept labor and OT usage flat into 1Q21. Norfolk has continually lowered headcount from pre-pandemic levels into 1Q21 but OT use has spiked to the highest level since 4Q18. We believe overtime expense represents a cost savings opportunity for NS in 2022. At current labor rates we estimate that every 100bps of reduced OT utilization could result in $16mm of annual labor savings which suggests a $26mm opportunity (20bps of OR) if the rate falls from the current 9.6% to the more recent 8% pre-pandemic.· Theme #3: E-comm and trailers are not taking up too much rail capacity. The anticipation of peak season following a container shortage raises the concern that intermodal capacity gets squeezed if trailers on flat cars (TOFC) are taking up space. Our analysis of the current TOFC and intermodal mix for BNSF, UP and NS indicate previous spikes in trailer volumes in late 2020 and early 1Q21 have2Brian P. Ossenbeck, CFANorth America Equity Research(1-212) 622-102313 May 2021brian.p.ossenbeckmoderated at the Western rails down -20bps while NS experienced a sharper decline down -135bps at the mid-May mark. UPs current mix of 5% is consistent with the five year average while BN is trending to 2019 levels and Norfolk's mix is nearly at a five year low. Overall, we do not see evidence that e-commerce or LTL loads are disproportionately impacting capacity on these intermodal networks.· Theme #4: Self-driving trucks wont affect traditional freight in the near term. The recent IPO of autonomous trucking company TuSimple has investors working through what a fully ramped AT offering may do to traditional freight modes and business models. We anticipate brokers will ultimately lose out as more capacity goes autonomous, given the models depend on fragmented carrier capacity markets, which could see more consolidation and transparency with the rise of AT. Conventional truckload carriers could integrate these trucks as part of their business model but will ultimately face rate pressure with higher adoption. Railroads pursuing single person crews might still need to watch for greater long haul competition.· Theme #5: The single person crew size debate keeps moving down track. The current state of play in the long running crew size debate has moved forward with a small victory for the rails after an arbitration will force the unions to negotiate on the issue. At this point it remains unclear what a final agreement will look like but crew size optionality represents a potential first step wherein rails exercise discretion to structure crew size based on operational dynamics. Throughout the history of railroading crew size and technology have had an inverse relationship thus we believe a deal ultimately gets done even if the rails are forced to accept a gradual phase-in, which would limit initial cost savings and slow productivity gains.3Brian P. Ossenbeck, CFANorth America Equity Research(1-212) 622-102313 May 2021brian.p.ossenbeckTable of ContentsTop Picks in Transports & Logistics .5Illustrated 1Q21 Review .6Revisiting Accumulates and Avoids .6Most Frequently Asked Questions from 1Q21.7Top Themes from 1Q21 .16Figure 1: North America Transportation and Logistics Comp SheetJPMMkt CapPriceDec '21Implied% % Consensus P/E and EPS2 YearJPM EPSEV/EBITDANet DebtCompanyTickerRating(Bn)5/12TargetReturnYTDQTD2021E22E2021E22EPEG2021E22E2021E22Eto EBITDAParcelsFedExFDXOW$78.5$297.82$340.0014.2%14.3%4.2%34.4x16.7x15.0x$8.67$17.87$19.914.2x$8.58$17.48$19.4515.0x9.4x8.5x3.3xUPSUPSN$183.4$211.63$224.005.8%25.9%23.9%27.5x19.5x18.8x$7.70$10.83$11.281.4x$7.74$10.50$11.2018.7x13.3x12.6x1.4xRailroadsCanadian National RailwayCNR CNNR$95.4$134.45N/A(3.5%)(7.8%)25.5x22.5x19.9x$5.27$5.96$6.7513.5x15.9x14.2x12.8x1.9xCanadian Pacific RailwayCP CNNR$63.3$474.93N/A7.8%(0.9%)27.0x23.3x21.1x$17.62$20.35$22.522.3x17.8x16.2x14.8x2.3xCSX CorpCSXN$75.7$100.00$102.002.0%10.5%3.3%27.7x23.0x20.2x$3.61$4.36$4.962.4x$3.59$4.25$4.9915.6x14.1x13.3x2.4xKansas City SouthernKSUNR$27.9$305.22N/A50.8%15.9%43.8x34.1x29.1x$6.96$8.94$10.503.2x22.7x19.4x17.1x2.7xNorfolk Southern CorpNSCOW$70.9$283.21$305.007.7%20.1%5.3%30.6x24.6x21.6x$9.24$11.50$13.124.5x$9.02$11.65$13.2418.1x15.1x14.0x2.5xUnion Pacific CorpUNPN$148.1$222.87$230.003.2%7.5%0.7%27.7x23.3x20.5x$8.06$9.57$10.854.2x$8.12$9.50$10.9616.8x15.2x14.3x2.7xTruckload Carriers & BrokersC.H. Robinson WorldwideCHRWN$12.9$97.15$94.00(3.2%)4.1%1.8%26.9x19.3x19.3x$3.61$5.02$5.034.0x$3.57$5.00$4.5018.3x14.1x14.0x1.5xEcho GlobalECHON$0.9$33.85$36.006.4%26.2%7.8%27.9x15.9x15.8x$1.22$2.13$2.151.3x$1.22$2.30$2.0513.0x9.4x9.6x1.3xHeartland ExpressHTLDN$1.5$18.36$20.008.9%0.9%(6.8%)21.1x18.2x16.8x$0.87$1.01$1.0910.0x$0.89$1.00$1.046.7x5.9x5.2x-0.7xKnight-SwiftKNXUW$7.9$48.18$40.00(17.0%)14.8%(0.4%)17.9x13.5x13.3x$2.69$3.56$3.630.6x$2.66$3.50$3.207.4x6.3x5.9x0.4xSchneider NationalSNDRUW$4.5$25.36$20.00(21.1%)22.1%0.9%21.0x15.2x14.1x$1.21$1.66$1.801.4x$1.21$1.65$1.507.4x6.0x5.3x-0.4xU.S. XpressUSXN$0