According to Jon A. Langenfeld, CFA of R.W. Baird, stabilizing freight demand and prospects for better pricing provide a positive 2010 backdrop. Summarizing some of Jon’s points in his 2010 Transport Investing Guide:

Expecting 2010 freight growth, but a sustained freight recovery not expected to build momentum until mid-year. Seasonal 2H09 demand build, recent expedited shipping demand, and lean inventories are positive leading indicators.

Expected guarded 1Q/2010 outlooks from managements because: 1) no incentive to be overly optimistic given ongoing uncertainty; 2) costs returning to the business; and, 3) a seasonally weak 1Q demand environment. Disappointing outlooks could be headwind to the stocks, but we would buy into any resulting weakness.
2010 truckload pricing growth (1-3%), with significant upside potential once sustained economic growth resumes Ongoing capacity rationalization from the systematic underbuy of trucks 2007-2010, supports a supply/demand equilibrium in 2010. Fleet additions among large carriers will be minimal and access to capital prevents additions from the broader industry. Intermodal rail directly benefits from better TL pricing.

Though industry conditions remain challenging and the timing of a sustained economic recovery remains unclear, we are encouraged by the leading indicators of improved seasonal demand trends, increased expedited freight demand, and continued lean inventories. We expect modestly improving demand trends to continue into early 2010, potentially setting the stage for stronger 2H10 growth, which we would expect to be accompanied by better industry pricing (most notably within truckload).