The global transport sector encompasses a wide variety of companies. Among its constituents are hauliers, shippers, train operators, airliners and postal services companies.
Certain names go on to become national and cultural icons. UK-listed haulier Eddie Stobart even manages to make decent profits from merchandising linked to its instantly-recognisable brand.
You´re unlikely to drive down a major UK road for more than five minutes without encountering one of its iconic green and red trucks.
What affects transport share prices?
While many of the companies in this area can pay decent dividends, transport names also tend to be cyclical. When global economic activity picks up, so does the revenue from transport plays as business and consumer spending rises.
Somewhat intuitively, in times of recession the going can be tough. Many companies in this sector also tend to be sensitive to oil prices as higher fuel costs erode profits.
The Dow Jones US Transportation Services sector has risen by around 21% over the past year, versus a 20% increase for the Dow index as a whole.
The US transportation segment rose sharply in the aftermath of Donald Trump´s victory in the US presidential election given the incoming administration´s pledges to boost US growth through fiscal stimulus measures.
However, the sector lost ground during May amid concerns that the Trump administration could struggle to get tax and spending measures approved by Congress as well as on the back of softer US economic data.
What can make a transport stock outperform?
UK-listed transport and logistics company Wincanton has risen by around 87% over the past year compared with an increase of 14% for the UK FTSE All Share Industrial Transportation index.
Over five years, Wincanton shares are up by a staggering 650% compared with the sector return of around 75%. The shares have soared over recent years as the stock has evolved from a recovery play to a growth story.
In 2012, many investors believed Wincanton would struggle to survive as it made a loss and debts rose. New contract wins have fuelled significant earnings growth, enabling the company to both cut debt and raise dividends.
Having successfully completed a corporate restructuring programme, the company is currently focused on organic growth. Among the recent contract wins is a four-year supply chain contract covering retailer Ikea´s London warehouses.
What can make a company's share price fall?
Shares in postal giant Royal Mail are down by 11% over the past year and 1% over the past five years, significantly underperforming the FTSE All Share Industrial Transportation index. The rise of electronic mail means its core business of delivering letters continues to shrink.
At the same time, Royal Mail is also facing increased competition in parcel delivery in its home market. If that´s not enough, the company has been weighed down by ballooning pension scheme liabilities.
Nevertheless, its international parcels business has been performing strongly of late, capitalising on the increased demand created by ongoing growth in internet shopping. This provides some hope that the shares may eventually come good.