Shipping by air allows manufacturers to have less inventory and still meet orders. Demand is going up, according to the The Commerce Department which reported that September retail sales rose 0.6% from August and increased 7.3% over last year. http://www.just-style.com/news/september-retail-sales-fall-at-clothing-stores_id109240.aspx
Is there a long term shift to airfreight? Do manufacturers have a preference for airfreight as a way to minimize warehousing and other costs that come with maintaining large inventories? The numbers seem to say so and the growth in airfreight could be a long-term trend.
The National Retail Federation (NRF) is forecasting holiday sales to increase 2.3% year over year, the largest increase in three years. http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=1010
Tech companies have embraced airfreight because of the short shelf life of many of their products. Just-in-time production prefers the speed and security of air transport.
Let’s look at the small cap air freight or air service stocks that could benefit from these trends and have less research coverage than multibillion market caps like FedEx (NYSE: FDX) and United Parcel Service (NYSE: UPS).
Greeneville, TN – based Forward Air (Nasdaq: FWRD, http://www.forwardair.com/), an air cargo trucker with a $750 million market cap, is an interesting back door play on the growth in airfreight. Since just 2%-3% of global freight moves by air, a 1% shift from the ocean to the air is meaningful. FWRD markets its airport-to-airport services primarily to air freight forwarders, integrated air cargo carriers, and passenger and cargo airlines. The 52-week high and low is near $30 and $20 with about 150,000 shares traded daily.
Based in Wilmington, OH, Air Transport Services Group (Nasdaq: ATSG, http://www.atsginc.com/) has a $440 million market cap and provides air cargo transportation services and airlift services to other airlines, freight forwarders, and the U.S. military. The 52-week high and low is just under $7 and $2 with about 440,000 average daily volume.
Maiden, NC-based Air T (Nasdaq: AIRT, http://www.airt.net/) has a market cap of $21m and provides overnight air cargo, ground equipment sales, and ground support services. AIRT offers small package overnight airfreight delivery services on a contract basis to the air express delivery services industry and offers its products to domestic and international passenger and cargo airlines, ground handling companies, the U.S. Air Force and Navy, airports, and industrial customers. The 52-week range is $13.48 and $8.30 and trades just over 10,000 shares a day.
Concord, CA-based Pacer International (Nasdaq: PACR, http://www.pacer-international.com/), with a $200 million market cap, operates as an asset-light freight transportation and third-party logistics provider in North America. PACR offers airfreight forwarding services as an indirect air carrier. The company sells and supports its portfolio of services to a variety of transportation companies. The 52-week range is $9.45 and $2.50 with about 600,000 shares traded daily.
Another micro cap stock based in Bellevue, WA, Radiant Logistics (OTCBB: RLGT, http://www.radiant-logistics.com/) operates as a transportation and supply chain management company worldwide and provides domestic and international air, ocean, and ground freight forwarding, and door-to-door delivery services through its network of approximately 70 offices across North America. The 52-week range is $.49 and $.22 and trades about 55,000 shares in daily volume. Its market cap is $14 million.