夏季会议季和虚拟管理会议的问题手册

1、Transportation & LogisticsQuestion Book for Summer Conference Season and Virtual Management MeetingsWe have compiled questions for management teams ahead of the virtual summer conference circuit beginning this week and continuing through early June. Management commentary will likely echo the growing

2、 consensus that freight activity stabilized at current levels while emphasizing opportunities in 2021. We do not expect the recent mid-quarter updates will continue in detail after most companies disclosed April trends during 1Q20 earnings as a “guardrail” for 2Q20 and to help reset 2020 estimates.

3、Included in the document are specific questions for companies categorized by topic as well as broad themes relevant for an entire group within transports; see page two for a list of companies covered in this note.North America Equity Research11 May 2020Airfreight and Surface TransportationBrian P. O

4、ssenbeck, CFA AC(1-212) 622-1023 HYPERLINK mailto:brian.p.ossenbeck brian.p.ossenbeckBloomberg JPMA OSSENBECK J.P. Morgan Securities LLCMatt V Fallon(1-212) 622-6431 HYPERLINK mailto:matt.v.fallon matt.v.fallonJ.P. Morgan Securities LLCKellen J Curry(1-212) 622-0717 HYPERLINK mailto:kellen.j.curry k

5、ellen.j.curryJ.P. Morgan Securities LLCShreshth Mahajan(91-22) 6157 3055 HYPERLINK mailto:shreshth.mahajan shreshth.mahajanJ.P. Morgan India Private LimitedSee page 40 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business

6、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 affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. HYPERLINK / Table

7、of ContentsTOC o 1-2 h z u HYPERLINK l _bookmark0 Parcel Carriers 3 HYPERLINK l _bookmark1 FedEx (FDX, $115, N) 6 HYPERLINK l _bookmark2 United Parcel Service (UPS, $105, N) 10 HYPERLINK l _bookmark3 Railroads 14 HYPERLINK l _bookmark4 Canadian National (CNR CN, C$115, N) 16 HYPERLINK l _bookmark5 C

8、anadian Pacific (CP, C$356, OW) 17 HYPERLINK l _bookmark6 CSX (CSX, $73, N) 18 HYPERLINK l _bookmark7 Kansas City Southern (KSU, $128, UW) 19 HYPERLINK l _bookmark8 Norfolk Southern (NSC, $199, OW) 20 HYPERLINK l _bookmark9 Union Pacific (UNP, $166, N) 21 HYPERLINK l _bookmark10 Truckload Carriers &

9、 Brokers 22 HYPERLINK l _bookmark11 C.H. Robinson (CHRW, $71, N) 24 HYPERLINK l _bookmark12 Echo Global (ECHO, $20, N) 25 HYPERLINK l _bookmark13 Heartland Express (HTLD, $18, UW) 26 HYPERLINK l _bookmark14 Knight-Swift Transportation (KNX, $40, N) 27 HYPERLINK l _bookmark15 Schneider National (SNDR

10、, $25, N) 28 HYPERLINK l _bookmark16 TFI International (TFII, $32, OW) 29 HYPERLINK l _bookmark17 U.S. Xpress (USX, $6, OW) 30 HYPERLINK l _bookmark18 Werner Enterprises (WERN, $38, UW) 31 HYPERLINK l _bookmark19 Intermodal 32 HYPERLINK l _bookmark20 Hub Group (HUBG, $52, OW) 34 HYPERLINK l _bookmar

11、k21 J.B. Hunt (JBHT, $105, N) 35 HYPERLINK l _bookmark22 Logistics & LTL 37 HYPERLINK l _bookmark23 XPO Logistics (XPO, $82, OW) 38 HYPERLINK l _bookmark24 Ryder (R, $27, UW) 39Parcel CarriersKey questions and themes for the groupIs it reasonable to assume B2B mix in the U.S. will ever return to the

12、 same level it was prior to the COVID-19 pandemic? If so, how long will this take?Aside from lower stop density and more miles driven, how would a permanent drop in B2B affect the broader P&D network, line haul system, and sort centers?What are the near term and long term strategies for expanding B2

13、B e-commerce? Is it more effective to build, buy, or partner to increase exposure in this area?How would a commensurate increase in returns with B2C deliveries impact the network balance and cost structure? Could this be a small silver lining, extending peak season and provide some balance to the P&

14、D network?Will there be any rush to reshuffle inventories when stores re-open which could drive an uptick parcel or freight volume?How has the business case for access points changed because of the pandemic? Have utilization trends changed noticeably? Are shoppers willing to go into a centralized ar

15、ea with shared equipment or lockers?Have any supply chain customers considered permanent adjustments in the wake of COVID-19? Will this focus on specific verticals or could it be more broad based after the recent trade war and tax reform?Does the recent jump in food delivery represent a potential th

16、reat for parcel carriers? Or could they represent potential partners with additional capacity?Will the Amazon Shipping service return after what appears to be a “trial balloon” in only a few cities over the last two years? Why or why not? Could it succeed if it invested more in building out a pick-u

17、p network?Is there any significance to Amazon delivering more packages (measured at origin) than FedEx or UPS? Or is this something they have to do in order to keep up with their own volume trajectory?Could the recent slowdown of delivery speeds after COVID-19 actually stick if consumers grow accust

18、omed to the current service level? Will Prime One Day ultimately be re-engaged after the next year of heavy investments?Why has Amazon Day failed to gain traction with an offer for customers to choose one shipment appointment during the week at their convenience?Will the industrys capital intensity

19、increase and drive lower returns if nearly all the volume growth is driven by B2C e-commerce which still requires sortation, and pick-up and delivery but come at a lower yield per piece?Could either of the integrators reverse their current strategy with Amazon, if they chose to? Or would that requir

20、e too large of a network adjustment at this point?Assuming the Amazon air hub comes online at Hebron, KY in 2021, how will it impact the domestic parcel industry? What are the most common misconceptions? Is DHL most at risk from the expansion as the current partner?Walmart recently accelerated the r

21、oll-out of Express Delivery which can be delivered in under two hours for an additional $10, what implications does this have for parcel delivery if it is mostly focused on consumables?What are the implications of Deliv shutting down and Target purchasing some of the assets and technology?How quickl

22、y is the “anti-Amazon” ecosystem growing within e-commerce? Are there strategic merits of partnerships with marketplaces to provide vertical integration and an alternative to Amazon? Could a venture gather more consumer data prior to a shipment in order to better manage capacity and utilization?Will

23、 cargo space added in recent months by commercial carriers have a meaningful impact on air capacity and pricing? Are they efficient enough to serve part of the market if passenger demand is slow to return?Airfreight rates remain strong, will there be a time when demand in the U.S. and Europe recover

24、s at the same time when Asia Pac lift capacity is constrained? How long could a tight market last at normalized volumes?Have express carriers invoked material adverse change clauses or force majeure in contracts during the crisis? Or has demand been managed by surcharges?Has the collapse in jet fuel

25、 affected demand for different services? Will lower fuel prices provide a financial tailwind at current levels?How is the industry gearing up for one day delivery at scale? Does this ultimately require a smaller air fleet as inventories are located closer to consumers? Would this help regional carri

26、ers which lack the scale to compete nationally?What are the implications of on-demand warehousing if broadly adopted?How much effective capacity did Saturday and Sunday deliveries add to the U.S. delivery networks? Will this provide any incremental cost savings or optimization benefits when fully im

27、plemented, or does it primarily drive volume growth?Are flat operating margins the new up for U.S. package operations? Is the B2C strategy now more focused on operating profit dollars and not margins?Could residential B2C packages ultimately be charged a delivery fee in the U.S.?Why have insurance c

28、osts increased significantly for parcel carriers in 2020? Will this liability remain elevated as volumes and miles driven continue accumulating?Can residential stop density ever improve in the U.S. without assuming consumers pick up packages at retail locations or other access points at a faster rat

29、e than overall residential B2C volume growth?Have the economics of access points changed in the last several years as the network has been expanded significantly? Are the terms materially different for adding a node near rural areas compared to one in an urban area?Prior to the pandemic, were retail

30、ers shipping directly to stores as a default option for certain items? How did consumers react to fewer choices, not free shipping?How will partnerships like Kohls and Amazon for in-store shipping and returns evolve if there are fewer locations in the future? Was this arrangement impacting the densi

31、ty of private carriers with Kohls?Have office or apartment buildings begun to limit the amount of packages which can be received and stored on site? Will the business model need to adapt to potential congestion fees in large cities and other delivery constraints?Will ESG considerations begin to have

32、 an appreciable impact on consumer behavior which could change purchasing patterns and delivery modes? How will the industry begin to address and adopt ESG considerations?What are the implications of the new Postmaster General hiring? Is there any precedent for a mid-year rate increase or will the n

33、ext increase come in 2021?How would a change to the USPSs universal service obligation affect the availability of Parcel Select products and shipping rates?Do the private carriers have sufficient capacity to navigate a service interruption or stoppage at the USPS if the organization cannot secure su

34、fficient funding?The Circuit Court in D.C. recently ruled against the PRCs method of setting competitive product prices which changed in 2019, could there be an increase in attributable costs large enough to drive package rates materially higher?Is the PRC expected to finalize its rulemaking on mark

35、et dominant products after the ten year review found the current system did not fulfill the original mandate?Could the implementation of higher terminal dues under the recent Universal Postal Union agreement have an appreciable impact on yields? What is the realistic impact on U.S. retailers and man

36、ufacturers over the next three years from these changes considering the FY17 shortfall for the USPS was only $170mm?What are the potential implications of major carriers continuing to pull back volume from the USPS? Will the drag on density have potential unintended consequences? Is the industry man

37、tra still “no relief without reform?SMBs are increasingly targeted by the three major carriers as a source of profitable growth, have these strategies benefitted the SMBs, not the carriers?The final mile of heavy home goods not been a focal point for the integrators, why is this not a growth area gi

38、ven the shift to larger and bulkier deliveries combined with expertise as a delivery company?Will the COVID-19 crisis accelerate drone delivery of specialized packages in constrained environments? How far along is the technology from residential applications at a commercial scale with greater operat

39、ing complexity?Autonomous trucks are increasingly utilized for limited line haul, can this technology deliver a 20-30% reduction in purchased transportation expense? Have these vehicles been tested in a yard or depot?FedEx (FDX, $115, N)Trade & MacroWhere was the weakness in B2B stemming from in the

40、 U.S. prior to the recent collapse in activity triggered by the COVID-19 shutdown?Have operations returned to normal in the Asia Pacific region after facing limitations related to the pandemic?Where are Chinese manufacturing levels currently and how does it differ between large and small operations?

41、 Did activity spike then decline again as demand evaporated in Europe and the U.S.?Which areas of trade and manufacturing are expected to be impaired or face a slow recovery after the pandemic? Are there any that could emerge stronger?How will international network capacity be managed in order to ad

42、just for the eventual economic recovery followed by the potential for near-shoring, shifting trade patterns, and other factors underway prior to the pandemic?FinancialsPro-forma leverage is approaching the 3.5x leverage covenant under the recently updated credit agreements, how restrictive is this c

43、ovenant to normal operations? What contingencies are in place to potentially de-lever or secure a waiver?The vast majority of the aircraft fleet is unencumbered and not leased, what value could the fleet secure for a potential loan? Does the excess amount of passenger aircraft and weaker internation

44、al trade significantly lower the fleet valuation?After shifting the aircraft schedule earlier in the year to delay a $300mm capital commitment for a year, is there any flexibility remaining to manage deliveries?Pension service costs at the segment level increase a small amount with lower interest ra

45、tes, is this a function of the ISP model? Why is the majority of the expense captured in the mark-to-market adjustment at year end?Are there plans to contribute more to the pension plan in FY21 after the liability increases upon re-measurement at year end, potentially by nearly $4B?Why did the fuel

46、revenue surcharge reporting change in the recent 10-Q to exclude the impact from changes to surcharge tables?If fuel prices stay at current levels, will this provide a financial tailwind?What incentive compensation run rate for the annual plan and multi-year awards should be expected in FY21 after s

47、ignificant variability over the last two years?How can the company mitigate rising insurance costs if delivery personnel are accumulating more miles? How long will it take to see meaningful improvement?Why was the move to six and seven day delivery more expensive than expected? Is there a reason to

48、assume this will not continue to drive costs higher?How much capex has been deferred into FY21 and beyond after the recent adjustments to pare down to only support safety, service and maintenance?Strategy & OperationsThe recent initiatives to pursue dynamic routing and bend the cost curve are remini

49、scent of UPS several years ago, how is FedExs strategy different?How have customers responded to the change in fuel surcharge tables? The spread with UPS in ground is now -75bps lower, how has this varied over time?Have plans changed to expand partnerships with Dollar General, Walmart and Walgreens

50、in light of post-COVID-19 shopping trends? Are these investments still expected to deliver the same pre-pandemic returns and benefits?What does dynamic routing provide Ground when fully implemented? How does this improve upon the systems currently in place?How did the decision to pivot back to B2B a

51、nd re-engage on the commercial side of the business unfold? Does this imply too much emphasis previously on B2C?What are the current thoughts on yield management across the portfolio and within specific business lines? How has this changed over the last few years when FedEx walked away from certain

52、customers?Is it possible to focus on improving yields while e-commerce growth accelerates and the industry adds capacity?The fulfillment strategy has not been a focal point for some time, are there more than two facilities at this point? Can this strategy grow with the emerging anti- Amazon ecosyste

53、m and other e-commerce platforms?How has the initial roll-out of the last mile optimization progressed relative to expectations? Will this program still take roughly a year to implement?How did the U.S. network miss Cyber Monday volume expectations by such a wide margin last peak season? Why will it

54、 be different this year?Is there a specific need to expand the network of dedicated small sort facilities?What will the new partnership with BigCommerce provide FedEx?How have the efforts to cut flight hours progressed? Have the cost savings and revenue loss unfolded as expected? Could higher yields

55、 provide an offset?Is there a demonstrable density benefit of delivering packages early to a residential address? Are faster delivery speeds a selling point or an expectation? At what point will Grounds speed start to overlap with Express?Nearly a year after taking the first steps to disentangle fro

56、m Amazon, what has progressed better than expected and what has proven more challenging? Was the shift because Amazons ambitions, a FedEx strategic initiative, or how the business model would function with a large customer tying up more assets?Has dealing with retailers in the “addressable market” b

57、een any less difficult than Amazon if they are subject to the same high consumer expectations?Is there risk of the USPS contract moving to another carrier in 2026 upon expiration? How would the Memphis hub operations react to the impact?What specific initiatives does FedEx have to expand B2B e-comme

58、rce?What strategic advantages and financial benefits come with FedEx becoming the low cost, high service e-commerce carrier? Would FedEx essentially replace the USPS in this scenario?ExpressHas Extra Hours gained traction with shippers since inception? How many are situated to take advantage of late

59、r fulfillment direct from a store/warehouse? Has the addressable market changed following the recent pandemic?Has the network been successful in replacing the lost volume and revenue from Amazon since the contract ended in June 2019?How fast can the air network flex capacity up or down with market c

60、onditions? Have more opportunities emerged for profitable volume growth post-COVID? Could retirements be accelerated to further consolidate the fleet?Would a move to one day shipping require fewer planes or more planes? What are the primary variables that influence the outcome?How will Express benef