Hot Picks: Three transportation stocks positioned to benefit from industry tailwinds

E-commerce growth, logistics outsourcing and looming capacity reductions in U.S. trucking are reshaping the transportation sector, creating openings for investors.

BNN Bloomberg spoke with Jason Seidl, analyst of transportation and logistics at TD Cowen, who outlined opportunities in parcel delivery, automated warehousing and long-haul trucking.

Key Takeaways

• Parcel carriers are expected to benefit from e-commerce growth, improving business mix and continued pricing discipline.
• Network restructuring and fleet adjustments at major carriers aim to lift efficiency and reduce long-term costs.
• Automated warehousing and logistics outsourcing are driving long-term growth for third-party logistics providers.
• Tightening U.S. trucking capacity — driven partly by regulatory changes — may support improved pricing conditions.
• Diversification and asset-light operations are strengthening the long-term resilience of major trucking companies.

Read the full transcript below:

ANDREW: On Hot Picks today we’re focusing on transport and logistics companies. Our guest says FedEx is his top idea, and he reckons it’s positioned to benefit from growth in e-commerce. We’re joined by Jason Seidl, analyst in transportation and logistics at TD Cowen. Jason, great to see you. Give us your case on FedEx. What attracts you to this stock?

JASON: Sure, Andy. Well, listen, it’s great to be here, and happy Thanksgiving to all the U.S. listeners out there. So look, FedEx right now, when you look at where it’s trading, it’s trading roughly in line with its historic average. But remember, the company is going to be breaking out its LTL division for investors, so we’re really looking at these things as a sum of the parts, because your LTL business tends to trade at a much higher multiple than your parcel portion.

Near term, don’t expect a lot out of FedEx or even UPS when you’re looking at the parcel guys. Peak season expectations, I’d say, are somewhat muted. Your business from your larger customers is probably in line with historical trends in terms of peak-season expectations, while your SMBs are a little more muted — in other words, people that probably can’t shift as much with the changes in tariffs and everything else. But the good news is that both FedEx and UPS are remaining very disciplined on pricing.

Now, you can’t overlook the recent tragedy UPS had with one of its freighters. The MD-11s are grounded for both carriers right now. It’s a workhorse for a lot of them, but it’s not a large percentage of their fleets. At FedEx it’s actually a little smaller — about four per cent versus nine per cent at UPS. We’re expecting these guys to shift a little more to the ground network, maybe deploy some extra spare aircraft, adjust some of the maintenance schedules going forward and probably take advantage of some of the belly space from consumer airlines.

Longer term, when you look at FedEx, one of the things I think excites investors is the network changes coming. Most people don’t remember that FedEx was actually created as an air network, then added ground later. So they’re going to be right-sizing their network going forward. Instead of having two FedEx trucks stop at your house, they’re going to try to go to one in as many places as possible.

ANDREW: Right, so that was the deadly plane crash in Kentucky forcing UPS and FedEx to ground their fleet — 14 people killed in that one. GXO Logistics: remind us what they’re all about and what attracts you there, Jason.

JASON: When you look at GXO, they’re basically an automated-warehouse provider and really a supply-chain coordinator. When you look at automation in the transportation space, a lot is focused on automated trucks, and that’s “on the come,” but it’s been “on the come” for many years. Right now, there is also automated talk on the rail side, but there’s a lot of pushback there as well. There’s really no pushback on the warehousing front, and this is the play.

There’s a new CEO who came in recently, Patrick Kelleher. He came over from DHL, very well respected in supply chain. He’s refocusing the company on organic growth and expanding into areas that tend to be a little higher margin. But the really interesting thing about these guys is they tend to lock up long-term contracts, and the renewal rate is in the 90-plus per cent range.

When you look at what they’ve locked up for 2026 through the third quarter, it’s almost enough for the growth we expect. They’ve got a lot of their growth already locked in. We suspect when they report Q4 they’ll have almost $1 billion in revenue booked for 2026 in new contracts. So there’s an exciting story there.

Also, a recent acquisition they did — Wincanton — that was held up by the British regulators is set to pay some dividends now. Because it was held up, they couldn’t take advantage of cost savings. We expect that to flow through at about $60 million for their EBITDA. And on top of that we expect it to allow them to expand more into the A and B consumer base, which should position the company well in the years to come.

ANDREW: And then finally, Knight-Swift Transportation — KNX in New York. What’s distinctive about them?

JASON: I’ll start off by saying in the U.S. trucking space, things are bad — there’s no way around that right now. We’ve been in a downturn for more than three years, the longest I’ve seen in my 30-plus-year career in logistics. That’s the bad news.

The good news is we’re starting to see ways capacity can come out of the marketplace, and a lot of that is being driven by the government. The FMCSA, which is under the DOT, has issued several rulings. The biggest one is the non-domiciled-driver ruling, and we estimate that can impact roughly eight per cent of capacity over a two-year period. That’s stayed in the courts right now, but we expect that stay will be lifted or maybe sent back to the FMCSA.

That’s a lot of capacity to take out of the marketplace, which should — all else equal — help pricing. Add on top of that some English-language proficiency testing that should take some drivers out of the marketplace, as well as illegally issued CDLs — commercial driver’s licences. Those things will be taking capacity out. Recently, California saw 17,000 CDLs taken out of the marketplace — almost nine per cent of their CDL capacity. Maybe not all of those were active, but still, it’s a way to take capacity out and provide some much-needed help to the U.S. trucking industry, which has been under the thumb of lower pricing for three years.

ANDREW: And what went on with those driving licences — there was fraud in the system?

JASON: Unfortunately, there’s been a lot of fraud in the system. You have what they call CDL mills, which will get you your CDL in one day. Think about that — you can get a licence to drive an 80,000-pound vehicle in one day. There are a lot of issues they’re looking to correct, and a lot of it is around safety. I know a lot of it has been politicized, unfortunately, but the focus is safety — and that makes a lot of sense.

ANDREW: And is this kind of fraud happening in Canada as well? Can you give us any colour?

JASON: Canada has had some issues too, with illegal drivers coming up, setting up shop and then closing down quickly and moving around. They have issues as well; it’s not just the U.S. I don’t want to paint such a bleak picture for my home country, but it is a problem.

On top of that, you have violations of the cabotage rule. When drivers come in from Mexico, for example, they’re supposed to drop off a load and go back. They’re not allowed to solicit other business once in the U.S., and typically they have about seven days. But you’re finding some drivers are staying 20-plus days in the country and probably soliciting other work. There’s a lot they’re looking at right now to curtail the capacity that expanded so much post-COVID.

ANDREW: Jason, thank you very much. You gave us great insight there. Really appreciate it. Jason Seidl, analyst in transportation and logistics at TD Cowen.

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This BNN Bloomberg summary and transcript of the Nov. 25, 2025 interview with Jason Seidl are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.