US Trucking Industry – Q2 2020 Update & Coronavirus Impacts – 14 May 2020

Can we start with an updated perspective on North American supply chains? How has the trucking industry been disrupted so far in 2020, given the divergence from investors’ initial expectations?

Would you expect a fairly significant shake-out for some of the smaller owner-operators in the industry? This was somewhat expected moving into 2020, following 2019’s lower pricing relative to previous years.

Can you contextualise the pricing environment? How should we estimate spot rates relative to last year?

Can you outline recovery timelines across these end markets? Which do you foresee recovering to 2019 demand most quickly, as more and more states begin to approach that return to normal productivity?

Players with the most diversified end markets will be able to weather this environment. Are there any carriers, trucking firms you are especially bearish or bullish on, given their end markets and diversification?

How do you expect XPO’s strategy to evolve? Its leadership team initially stated interest in divesting some non-core business units, and have now shifted towards an opportunistic approach potentially examining further acquisitions. Could XPO be seeking to add capacity on the cheap in the current trucking market?

Would you expect the various services across truckload, LTL [less-than-truckload], final mile and intermodal to recover at different rates? Which would you expect to bounce back quicker than the rest?

Some previous Interviews have highlighted a lack of refrigerated boxes capacity in the US. Would you agree with that observation?

What is your high-level assessment of new, disruptor digital freight brokers such as Uber, Convoy and Transfix? How would you characterise their competitiveness and impact on the trucking market?

Have you noted digital freight brokers penetrating other markets such as LTL? Have they entered other markets outside of truckload?

How might capacity evolve in the North American market in the next 2-3-years? Can we expect incredibly favourable pricing 2-3 years from now, due to the likely capacity fallout over the next couple of months?

Can you outline the conversations these players are having around providing additional services? I assume you were involved with that in your former role. This is essentially the opportunity to cross-sell.

Is there any angle of the trucking market you would recommend examining more closely? Is there anything you believe investors frequently misunderstand about trucking and 3PL [third-party logistics]?

What 1-2 key strategies do you think major carriers will be prioritising over the next couple of months?