YardDog Market Watch - Oct 28, 2024

LOGISTICS
UPS Braces for a Softer Shipping Season

UPS forecasts a quieter peak shipping season partially due to the fact that there are only 17 shipping days between Thanksgiving and Christmas Eve. This year’s shortened peak season might influence consumers to shift toward in-store shopping.

The company, which saw increased third-quarter profits, attributes this to improved operational efficiencies and revenue growth despite reduced U.S. online sales and slower global manufacturing. Over 100 major customers have scaled back their holiday volume expectations, contributing to a more subdued season outlook. 

Domestic air volume has declined due to a reduction in Amazon’s air shipments. UPS continues to expand internationally and streamline operations, recently acquiring Frigo-Trans for enhanced healthcare logistics in Europe.

For trucking, UPS's softer shipping season suggests a potential dip in demand, especially as major customers scale back holiday shipments. This could mean fewer loads and less freight volume for trucking companies that support UPS's operations, impacting revenues in that sector.

For more, read the full FreightWaves article.

TRANSPORT 
Ryder Focuses on Stable Growth in an Unpredictable Market

Ryder has shifted its business model to rely more on long-term contracts over short-term rentals, with contract-based services now making up 60% of its revenue. This transformation provides Ryder with steadier revenue and greater resilience during market fluctuations.

Despite a slight dip in quarterly earnings per share, Ryder’s revenue increased, bolstered by acquisitions. Used vehicle sales, although down, still support the bottom line. This shift in business strategy reflects Ryder’s focus on predictable, contractual growth while navigating challenges in the rental market.

As Ryder’s contractual model stabilizes demand for its fleet and assets, there may be a stronger need for reliable storage spaces for its vehicles, trailers, and equipment, especially during contract turnover periods. Additionally, IOS facilities near major logistics hubs may see increased, consistent demand if Ryder stores excess inventory or needs transitional space between contract assignments. This trend aligns IOS facilities with growing needs for flexible, contract-based storage solutions in the logistics sector.

For details, read the full FreightWaves article here.

MARKET 
Why Investors are Looking Beyond Stocks and Are Eyeing Alternatives (Like IOS)

Goldman Sachs projects a much slower growth rate for the S&P 500 over the next decade, forecasting annual returns of around 3%, a steep drop from the 13% average seen in the past decade.

This is largely due to the index’s high concentration in a few large tech stocks, whose growth may decelerate, echoing past cycles like the 1970s "Nifty Fifty" and the 2000s tech bubble. Analysts suggest diversifying into other assets like small caps and international stocks, which could offer more stable growth.

With the S&P 500's expected return slowing, industrial real estate, particularly industrial outdoor storage (IOS), may become increasingly attractive as investors seek alternative assets with stable, cash-flowing potential. As demand for logistics and storage facilities remains strong due to e-commerce growth and supply chain needs, IOS investments could offer more reliable yields compared to an S&P-heavy portfolio. Additionally, diversification into tangible, income-generating assets like industrial real estate may appeal to investors wary of the predicted volatility and slower growth in traditional stock indices.

For details, read the full overview that Axios published here.

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