Transportation stocks have faced a significant downturn following the Trump administration’s announcement of widespread tariffs. According to a recent report, less-than-truckload (LTL) stocks were hit the hardest, plummeting 18% over a two-day period and down 33% year-to-date. Old Dominion Freight Lines (NASDAQ: ODFL) managed to perform better than its peers, minimizing the overall impact on the sector due to its substantial market cap representation.

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The LTL sector, which once thrived during the pandemic and subsequent inventory restocking periods, is now grappling with an industrial downturn. This downturn, coupled with acquisitions of terminals from the defunct Yellow Corp. and other expansions, has resulted in networks operating at near-record capacities. Concerns are mounting over the potential unraveling of the industry’s favorable pricing dynamics, especially with reports suggesting Amazon (NASDAQ: AMZN) might become a significant player in the LTL space.

As the first-quarter earnings season approaches, starting April 23 with Old Dominion’s report, analysts are wary of the potential outcomes. The chaotic trade policy environment has led to reduced earnings expectations, with Susquehanna Financial Group’s Bascome Majors lowering estimates for core LTL carriers by 2% to 7% for the first quarter. Full-year 2025 estimates have been cut by high-single-digit to midteen percentages, reflecting a challenging macroeconomic backdrop.

FedEx’s (NYSE: FDX) LTL unit, FedEx Freight, also reported disappointing results for its fiscal quarter ended February 28, with revenue down 5.3% year-over-year and tonnage falling 7.6%. Despite a slight increase in yield, the operating ratio worsened by 300 basis points compared to the previous year. The sector’s reliance on business-to-business commerce makes it particularly vulnerable to the new tariffs. Moreover, the Manufacturing Purchasing Managers Index has dipped back into contraction territory, with new orders signaling a decline. This contraction, along with increased prices due to tariffs, poses additional challenges for the LTL industry. Analysts note that demand has not improved, and the sector has lost some heavier-weighted shipments to the truckload market due to depressed rates.

TD Cowen has cut estimates for TFI International (NYSE: TFII) due to margin risks at its LTL subsidiary TForce Freight. TFI’s exposure to the industrial complex, accounting for roughly 80% of its business, has led to significant pressure from tariffs. CEO Alain Bedard acknowledged the challenges, highlighting issues with volume density and service quality. With transportation stocks experiencing a severe pullback, there is speculation that investors might return sooner than expected, given the administration’s inconsistent approach to tariffs.

Source: IndexBox Market Intelligence Platform