Road trip

Potential for growth in transportation logistics

A friend and I recently completed a 2,300 kilometre car trip from Florida to Toronto. Not only was it a grueling drive but it brought home in stark terms the grim reality of the economic impact COVID-19 is having on rural America.

We’ve all seen images of the empty streets in cities like New York and Toronto. I can report that the highways are empty too, apart from commercial transport trucks that are keeping the supply chains open and an occasional Canadian RV heading home. In fact, I saw more private cars on the road between St. Catharines and Toronto than I did on the entire drive through the U.S.

Small rural businesses along the way have either closed or are struggling to keep going. The only operating restaurants were the occasional fast food places offering drive-through service only. Most gas stations were still open, although some have closed down or are about to do so. Ellen, a cashier in a convenience store at a filling station in South Carolina, told me she was the only person working and didn’t know how long that would go on, since business was off about 70%. “If we close, I don’t know where we’ll get the money to live on,” she said.

Some hotels are also closing, and the ones that remain open are operating with skeletal staffs. “We plan to stay open as long as the government lets us,” said Jan, the desk clerk at a Hampton Inn in Erie, Pennsylvania. “But we’ve had to lay off staff, and the ones that remain are working 12-hour shifts.” She said that many hotels near airports have shut down entirely as air traffic has been slashed. In some cases, they were hosting only one or two guests a night.

The automobile side of the U.S.-Canada border at the Lewiston-Queenston Bridge was almost deserted. There was only one booth open and one car ahead of me. The border patrol officer glanced at my passport, asked how long I had been away, and warned me in stark detail how the law required me to go into mandatory isolation for 14 days and the dire penalties I would face if I failed to comply. He then handed me back the passport with a form outlining ways to protect myself (hand-washing, big surprise!) and supplies to have on hand (including hand sanitizer, as if anyone can find it). He asked no questions about what was in the car, even though it was packed with clothes and personal items.

Rolling stock

That’s a small sampling of one road trip. Anyone who has travelled by highway recently in the U.S. or Canada would probably have had a similar experience. But the long hours on the road caused me to think about what is working and where to invest now. One obvious answer was right in front of us as we drove – trucks.

Drivers are working overtime (and perhaps dangerously so from lack of sleep) to keep food, supplies, and medications on our grocery and pharmacy shelves and to supply needed parts to industry. They are among the overlooked heroes in this crisis.

We saw many trucks on the road from J.B. Hunt Transport (NDQ: JBHT). This Arkansas-based firm is one of the largest transportation logistics companies in North America, providing services throughout the U.S., Canada, and Mexico.

The company was incorporated in 1961 and went public in 1983. It’s a huge operation and a member of the Fortune 500. Its services include transportation of full truckload containerized freight, using company-controlled equipment and company drivers or independent contractors. Hunt also has arrangements with most of the major North American rail carriers to transport truckload freight in containers and trailers.

The stock hit an all-time high of US$122.29 in November but then dropped to a low of US$75.29 in mid-March as the whole market crashed. That was clearly an overreaction by investors. Hunt has become an essential business in these crisis times. The stock has rebounded and was trading at the US$100 level recently.

That said, the stock markets are incredibly volatile these days so big swings up or down in the shares of even the most solid companies are possible. But J.B. Hunt is one firm that should prosper in these troubled times. Ask your financial advisor about it.

Please stay safe. We’ll get through this together!

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website. This article originally appeared in The Toronto Star. Used with permission.

Follow Gordon Pape on Twitter at https://twitter.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.

Notes and Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.