冬季会议和管理会议问题手册

1、Transportation & LogisticsQuestion Book for Winter Conference Season and Management MeetingsWe compiled questions for each management team that will be on the road over the next month as 4Q earnings winds down and the winter conference circuit ramps up. In the document there are specific questions c

2、ategorized by topic for individual companies as well as broader themes relevant for an entire group; see page two for a complete listing of companies covered in this note. We will update this question book in early March prior to the J.P. Morgan Aviation, Transportation and Industrials conference he

3、ld in New York City on March 5-7.North America Equity Research11 February 2019Airfreight & Surface TransportationBrian P. Ossenbeck, CFA AC(1-212) 622-1023 HYPERLINK mailto:brian.p.ossenbeck brian.p.ossenbeckBloomberg JPMA OSSENBECK J.P. Morgan Securities LLCCaleb B Hogan(1-212) 622-9207 HYPERLINK m

4、ailto:caleb.b.hogan caleb.b.hoganJ.P. Morgan Securities LLCLacey-Ann Wisdom(1-212) 622-9566 HYPERLINK mailto:lacey-ann.wisdom lacey- HYPERLINK mailto:ann.wisdom ann.wisdomJ.P. Morgan Securities LLCSanket P Parab(1-212) 622-0608 HYPERLINK mailto:sanket.p.parab sanket.p.parabJ.P. Morgan India Private

5、LimitedSee page 31 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 affec

6、t the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. HYPERLINK / Table of ContentsTOC o 1-2 h z u HYPERLINK l _bookmark0 Parcel Carriers3 HYPERLINK l _bookmark1 FedEx (FDX, $233, OW)4 HYPERLINK l _bookmark2 United Parcel

7、 Service (UPS, $122, N)6 HYPERLINK l _bookmark3 Railroads8 HYPERLINK l _bookmark4 Canadian Pacific (CP, C$337, OW)9 HYPERLINK l _bookmark5 CSX (CSX, $86, OW)10 HYPERLINK l _bookmark6 Norfolk Southern (NSC, $203, OW)11 HYPERLINK l _bookmark7 Union Pacific (UNP, $177, N)12 HYPERLINK l _bookmark8 Kansa

8、s City Southern (KSU, $122, N)13 HYPERLINK l _bookmark9 Canadian National (CNR CN, C$116, N)14 HYPERLINK l _bookmark10 Genesee & Wyoming (GWR, $88, N)15 HYPERLINK l _bookmark11 Truckload Carriers & Brokers16 HYPERLINK l _bookmark12 C.H. Robinson (CHRW, $94, N)17 HYPERLINK l _bookmark13 Echo Global (

9、ECHO, $28, OW)18 HYPERLINK l _bookmark14 Schneider National (SNDR, $23, N)19 HYPERLINK l _bookmark15 Werner Enterprises (WERN, $32, UW)20 HYPERLINK l _bookmark16 Knight-Swift Transportation (KNX, $36, N)21 HYPERLINK l _bookmark17 Heartland Express (HTLD, $15, UW)22 HYPERLINK l _bookmark18 U.S. Xpres

10、s (USX, $11, OW)23 HYPERLINK l _bookmark19 Intermodal24 HYPERLINK l _bookmark20 J.B. Hunt (JBHT, $118, N)25 HYPERLINK l _bookmark21 Hub Group (HUBG, $48, N)26 HYPERLINK l _bookmark22 Logistics & LTL27 HYPERLINK l _bookmark23 XPO Logistics (XPO, $84, OW)28 HYPERLINK l _bookmark24 Ryder (R, $50, UW)30

11、Parcel CarriersKey questions and themes for the groupHow would the U.S. withdrawal from the UPU affect import and export volume through foreign posts as well as the cost of delivering e-commerce?Will the STOP Act and the mandatory collection of electronic data by the USPS in 2021 affect the mix of i

12、nternational mail and express shipments?How have the recent package and parcel select rate hikes from the USPS had an appreciable impact on the market?How successful have the efforts to build synthetic density been over the last several years in the U.S.? Will this actually take hold and help bend t

13、he cost curve and if so, what is needed to see meaningful improvement?Is the next phase of package volume growth in the U.S. solely driven by lower yielding B2C deliveries which will require a more efficient network to prevent margin compression?Could there be a time when e-commerce grows so large t

14、hat a direct to consumer network devoted solely to deferred volumes could operate separate from express or are there too many synergies and shared resources for the two to operate independently?The U.K. e-commerce market has been unusually weak during November and December, have these trends continu

15、ed in January and affected more than just retail-based and consumer shipments?What is the near and long term strategy for expanding B2B e-commerce?Is the roll-out of FedEx Extra Hours and extended cutoff times extending the misconception of “free shipping?What types of packages and service threshold

16、s would see increased competition from an expanding air network?FedEx (FDX, $233, OW)Trade and macroHow much volume is tied to China and other areas currently experiencing volatility due to trade tensions and tariffs?Have airfreight rates reacted to recent trade tension, FX volatility, or pull forwa

17、rd of shipments ahead of tariffs?Will lower oil prices provide a tailwind in terms of mix shift? How much does fuel impact the income statement on a quarterly basis if now the fuel surcharges have moved to a two week lag?M&AHow much of TNT integration costs have been lapped? What have been the major

18、 costs of the integration other than recovery from the cyber attack?How much will lower TNT integration expenses, pension funding and capital expenditures boost FY20 free cash flow versus FY19?Will union involvement and agreements in Europe present an ongoing headwind to streamlining operations at T

19、NT?ExpressWhat is FedExs strategy for gaining market share in Europe against more established competitors?How much involvement does Express have in the extra hours program from both a pick-up and delivery perspective?What steps has the company taken to flex the network assets in order to adjust for

20、slower growth and weaker mix in 2019?What are the implications of a hard or no-deal Brexit for Express?Why did UPS not face nearly the same headwinds from China and Europe?GroundHow has the transition to six day delivery year-round been received by shippers and the companys independent service provi

21、ders?Are there limits placed on shippers to participate in either the six day delivery or extra hours?Will the next wave of investments be primarily centered on automated satellites and smaller facilities to build point to point lane density?What are some of the potential efficiency measures and pro

22、ductivity gains targeted within the segment that are scalable to the ISP providers?Is there still room to expand yield or are the next several years going to be more of a focus on cost avoidance?FreightHas the looser truckload market begun to impact the LTL business?Is the dual service offering stil

23、l a competitive advantage?How far along is Freight in utilizing technology on the cross-docks, driver routing, and customer interactions?If segment margins are not yet double digits in one of the strongest freight markets in decades, what needs to be improved to reach this goal?How will the company

24、provide a different solution for heavy home goods and white glove delivery service than other competitors within the space?TechnologyCurrently Chanje vehicles only represent a small percentage of the companys total fleet, is there an option for FedEx to expand its partnership with Chanje to bring on

25、 more electrical vehicles?What are some limitations to the expansion of an electric vehicle fleet? Does sufficient infrastructure in the form of charging stations and maintenance locations currently exist?What would be necessary to make it economical to make electric vehicle adoption more widespread

26、 within FedExs fleet?DisruptionAmazon recently announced that it would eliminate surcharges on its shipping platform, will the company consider modifying other surcharges to remain competitive similar to the residential charge over the holidays?What are the implications of the recent disclosure that

27、 Amazon is no more than 1.3% of consolidated revenues?United Parcel Service (UPS, $122, N)Trade and macroWhat has been impact of trade tensions and tariffs on international volumes and demand globally? Are customers still adjusting supply chains in response to the ongoing uncertainty?Have airfreight

28、 volumes reacted to recent geopolitical volatility or trade tariffs? Is UPS more or less sensitive to global economic growth than it was during the Global Financial Crisis?Will lower oil prices provide a tailwind in terms of mix shift? How much does fuel impact the income statement on a quarterly ba

29、sis if now the fuel surcharges have moved to a two week lag?U.S. DomesticHow much does the extension of useful asset lives in 3Q18 help boost expected operating income during 2019?Can SMB and B2B growth continue at the recent pace without offering incentives and other concessions to shippers?Base ra

30、tes have increased over 3% in 2018, is that a sustainable pace in 2019? What are the key drivers of the recent momentum?What are the market factors supporting the recent strength in Next Day Air in both yields and volume which is expected to continue in 2019?Why were margins during peak below invest

31、ors expectations and the performance of the last several years despite strong base rate gains?InternationalFX volatility in emerging markets has been a drag on profitability during 2018, are there any further changes planned for managing FX risk?How was the segment able to sidestep the volatility wh

32、ich befell other companies with global exposure during 4Q18?Are the new international investments in aircraft and facilities beginning to yield dividends or these more likely to make an impact in 2020?Can UPS continue to gain market share in Europe while maintaining or expanding margins? What is dri

33、ving the expected positive mix in 2019?How is the split between domestic and export when considering the guidance for 3-5% average daily volume growth next year?Supply Chain and FreightWhy is the impact from the labor issue in 4Q18 expected to linger throughout the first half of 2019?What are the sp

34、ecific drivers of the low to mid-teens operating income growth in this segment?Are there specific opportunities that have been identified in the Transformation process for SCF?What new applications of technology has the Forwarding segment piloted over the last several years? Are any ready for commer

35、cial deployment?What are some objectives of the new supply chain head? Was he given targets and specific goals or is he working with more autonomy?TransformationHow close is UPS to achieving its goal of 80% automation by the end of 2019? Does the company see its 2019 goal as a peak or is it possible

36、 that automation will continue to improve incrementally into 2020 and beyond?Is capex still expected to decline to 6% of revenue after 2020? What could trigger another jump in spending?Where is the incremental $1B of working capital savings expected to come from after the company had a similarly siz

37、ed tailwind in 2018?When will the company be able to provide some context as to the impact of the new labor contract with small package employees?DisruptionAmazon recently announced that it would be stripping out additional surcharges on its shipping platform, does UPS believe this will be a source

38、of competitive pressure or differentiation in the future?Have any of the recent investments and joint ventures with smaller companies focused on returns or e-commerce provided significant benefits at this point or are they still too early or small to make an impact?What challenges has UPS faced in i

39、ts expansion to home healthcare delivery? Has the company faced increased regulatory pressure due to the ongoing opioid crisis?RailroadsKey questions and themes for the groupWill the current iterations of Precision Scheduled Railroading be kinder and gentler than what we have been accustomed to in t

40、he past? Are shippers more or less willing to partner with a new system having seen the disruption and benefits of the last two years?When will pricing renewals begin to increase at a slower pace than same store sales or another comparable metric?At what point will additional capacity coming back to

41、 the U.S. trucking market begin to impact pricing and volumes? Will the recent experience of 2018 keep shippers from switching back to truckload?What are the criteria to rationalize intermodal lanes when pursuing PSR? Is this an iterative process or primarily done in one big adjustment?When will mix

42、 shift turn negative again assuming intermodal continues to grow at a faster pace than commodity carloads?What is the latest update on positive train control implementation, testing, interoperability, expenses and potential benefits?Will capex eventually move higher as railroads exhaust their primar

43、y operating efficiency opportunities and need to invest to grow?Which areas of regulation in rails and trucking provide the most interesting opportunities or potential challenges over the next 3-5 years?Could operating ratio eventually be replaced by ROIC or a wide range of other key performance ind

44、icators?How much of an impact have actual and potential tariffs on China and the EU had on freight flows? Has even more goods than usual moved ahead of the Chinese New Year as shippers adjust supply chains?Where are customer inventory levels heading into 2019? Have they increased with any pull-forwa

45、rd of shipments or to avoid any increases in accessorial fees or demurrage charges?What are the primary sources of inflation over the next year and where will you see the largest cost pressure and potential operating leverage?Canadian Pacific (CP, C$337, OW)Strategic & OperationalWhat are the specif

46、ic operating efficiency improvements expected for 2019 and how do they compare to volume-centric leverage? How much can company specific opportunities boost margins if volumes decelerate?Will capital intensity continue to climb over time similar to CN as margin expansion opportunities decrease or be

47、come less impactful?Does CP believe investments across the supply chain will be more common in order to build partnerships and increase volume opportunities?GeneralAre the recent efforts by U.S. rails to implement PSR principles yielding noticeable benefits or disruptions at key interchanges?The dem

48、urrage and accesssorial fees provided to the STB were only for theU.S. portion of your business, is the percentage of revenue similar in Canada? If it differs, why?End Markets & FinancialHow is the company progressing in the $1bn opportunity set between automotive and international intermodal? Have

49、you seen a change in CNs competitiveness?How have the recent curtailments for Canadian oil shipments affected CPs franchise and are the new contracts working as expected?What run rate do you expect for CBR post-2019? What percentage of the new CBR business will be retained versus moving to pipelines

50、?What adoption have you seen on new intermodal initiatives such as CP TempPro? If customers have embraced, have you been able to generate higher than average revenue or margin off of this businesses?How many of the grain elevators serviced have expanded to load the longer grain trains? What percenta

51、ge of the fleet is currently the new high-capacity grain hoppers and when will it be fully converted?Increasing intermodal service consistency was a feature of the recent investor day, how has this translated to commercial success and what percentage of the network has implemented the new operating

52、plan?How will the expected implementation of ELDs in Canada affect the domestic intermodal market? Are the opportunities readily apparent as they were in some lanes across the U.S.?Frac sand was identified as a challenging market on the last earnings call, is that specific to the Permian or has the

53、shift to local sand progressed to other basins including the Bakken?What growth opportunities have you already seen in the industrial heartland? Has the revenue opportunity grown as expected thus far?CSX (CSX, $86, OW)Strategic & OperationalWhere is the network running in relation to some of the KPI

54、s and performance metrics provided at the 2018 Investor Day?What are your expectations for the competitive landscape in the East? Do you expect to take share while the NS network is reconfigured?Is the UP goal of a 55% OR realistic for CSX at any point? If so, what are the primary areas of improveme

55、nt to attain that target?Locomotive count has fallen throughout the PSR transition, when do you think this trend will reverse and the count will begin to increase?What was the trip plan compliance in 4Q18 and why were on time arrivals only up by 4%?How much room is remaining on headcount reductions?

56、 Should we expect this trend to continue in 2019 or should we be thinking of a flattish trend after the intermodal network is consolidated?GeneralDo you believe the demurrage gains in 2018 are sustainable or will this normalize as customers adapt their shipping methods?Have shippers take more delive

57、ries than they otherwise would have to avoid demurrage and other accessorial fees during the PSR transition? Is there a risk of an inventory build that needs to de-stock in 2019?End Markets & FinancialExport coal has remained strong into early 2019. What are your expectations for export coal in 2019

58、? Do you anticipate price increases in addition to volume growth?How much of the forecasted export coal volumes in 2019 have been secured by contracts with liquidated damages or take or pay provisions?CSX de-marketed some intermodal volume to start 2019. Is this expected to continue throughout 2019

59、or have you reached the point where you are comfortable with the existing business?Capex as a percentage of revenue has declined under PSR. What is the steady state percentage that we should be modelling? Are you running at pure maintenance or is growth embedded in guidance?The current leverage targ

60、et is 2.0-2.5x, but CSX has run at the low end of that range. Would you lever up to increase shareholder returns? Will the new $5bn share authorization be primarily funded with FCF?Has CSX also experienced the coal production shortfalls that Norfolk identified during 4Q18 earnings?Is 100% FCF genera