Transportation Stocks: The Basics
Investors can gain exposure to the transportation sector by investing in specialized funds or individual stocks, with two popular indices providing an excellent benchmark for evaluating performance.
The transportation sector belongs to the industrials sector and involves companies that move people or goods and build transportation infrastructure. This sector includes industries like air freight and logistics, airlines, marine, road and rail, and transportation infrastructure. The sub-industries within the transportation sector include air freight and logistics, airlines, marine, railroads, trucking, airport services, highways and rail tracks, and marine ports and services.
Companies in the transportation industry are greatly affected by changes in company earnings and transportation service prices. This is mainly attributed to several factors such as fuel and labor costs, demand for services, geopolitical events, and government regulation. These factors are often interlinked. For instance, if the U.S. government introduces regulations that make it harder for individuals to obtain commercial drivers’ licenses, the supply of drivers will decrease, leading to increased hiring costs.
