Transports are fantastic leading indicators of economic growth. The current weakness in trucking and freight companies is truly remarkable. UPS reported a very bleak quarter this morning and issued mixed guidance with the following negative guidance:
“Visibility into the future has become increasingly difficult given the enormous amount of economic uncertainty around the world,” said Kurt Kuehn, UPS’s chief financial officer. “Therefore, UPS will provide guidance only for the first quarter, which is earnings per share within a range of $0.52 and $0.68.
“The year will undoubtedly be one of the most difficult in UPS’s history,” Kuehn continued. “Since economists do not expect any meaningful recovery until 2010, earnings in 2009 will suffer. Lower volume levels and reductions in package weight will put further pressure on margins. We anticipate the first quarter will be weak, with slight improvements later in the year as initiatives take hold.”
Davis added, “Our company has long demonstrated the ability to manage effectively in response to changing market conditions and is financially the strongest in our industry. UPS will emerge leaner, more focused and better positioned when economic trends improve.”
The transports are almost always among the first companies to see the economy rebounding. These companies deal with 70% of all consumer goods transported around the country. As of now it’s clear that UPS is not seeing any sign of economic stability.