I’m sitting in a bar/restaurant in Baltimore-Washington International (BWI) airport. As you know, my father’s 80th birthday was last night. We had about 85 guests. Former executives from the spice giant McCormick & Company surrounded me. Once I mentioned what I’ve been up to since I last saw many of them 20 to 25 years ago, they immediately asked me about my views on global freight driver shortages.
These are people who bought spices by the pound and sold them by the ounce. Yet, even in their retirement, they’re paying close attention to the supply chains. For example, one former executive’s son works in air freight. They are completely booked through the end of November.
I also talked to two people advising their sons not to go to college and instead get a Commercial Driver’s License (CDL). Why go into six-figure debt when you can see the country and make six figures in the process? He wasn’t aware that there are age requirements for drivers, but it’s possible these rules change.
Freight Driver Shortage
In the first two minutes of being at the Greene Turtle in BWI, I’ve heard people talking about the ongoing driver shortage, breakdowns in the meat supply chain, and rising fuel costs.
My colleagues at Godesburg Financial Publishing are in Orlando at an annual research conference. Do you know what they are talking about? You get three guesses, and the first two do not count.
This is going to turn into a very crowded trade. So, if you’re looking at shipping container stocks, master limited partnerships, trucking firms, and freight companies, be aware that this might produce some mania in the weeks and months ahead. You must have a plan to ride these industries higher.
Freight Stock Examples
I recommend that you place trailing stops in your stocks if you’re simply going to let them ride and not look at them. For example, perhaps buy a stock like CSX Corporation (NASDAQ:CSX), an extensive rail transportation firm that moves grain, fuel, and other commodities. You can set a trailing stop of 10% to 15% should these stocks appreciate. You won’t need to do anything else.
I think that riding the momentum here is going to be the best way to go.
We are looking for firms that will be able to set whatever rates they desire as the summer months progress. CSX fits the bill. So do companies like Daseke Corp. (NASDAQ:DKSE), which is a flatbed trucking firm with significant upside in the months ahead.
And this assumes they even have any capacity left. I’ve kept my ear to the ground on this issue for four months. I’m also on the board of a tech firm that connects grain trucks to farmers and other organizations.
Freight Trade Heating Up for Summer
We are struggling to find willing drivers for a harvest that is still months away. The good news is that we’re proactive, and we’re well in front of it. We’re snapping up the drivers long before people start to panic. We’ll be talking about grain left in the middle of fields because they can’t move it off the farm fast enough.
It’s going to be a red-hot summer in the freight trade. This is my sweet spot in the commodity world. So, I’ll be sure to look for any value and momentum in this space. I’ll also keep you informed on what the insiders are doing at these firms.
