Transportation Stocks Surge as Data Centers Drive Freight Boom
Silicon claimed the headlines, while diesel did the dirty work... until now. With data-center construction flooding shipping lanes, freight costs have hit a four-year high — all while supply chain tightening has shrunk capacity. Amid the squeeze, transportation stocks, long overshadowed by the chip rally, are breaking out to record highs.
- The transport price gauge in the Logistics Managers’ Index hit a record 96 — representing the fastest rate of expansion in the survey’s decade-spanning history.
- Overall logistics costs reached their highest point since Mar. 2022 — with freight carriers piling on fuel surcharges as they seized pricing power.
Follow the freight: With the iShares US Transportation ETF up 13.3% this year, Piper Sandler is nudging clients to rotate chip gains into transport. Even after the rally, trades at a forward P/E of 20.6, well below the semiconductor sector’s 26.2. That said, the inflation picture is where it gets complicated. The Fed’s usual playbook doesn’t work well against supply shocks. Higher rates can slow demand-driven spending, but they can’t put more capacity on the road. The last time costs sat here, the US was staring down its worst inflation in 40 years.
