The Freight Flip: Why Trucking is the Road to Riches as Rails Stall

Investors, buckle up. The freight world is shifting under your feet, and Goldman Sachs has just handed us a roadmap to profit from the biggest logistics realignment in decades. Let me break it down: rail stocks are stalling, and trucking is about to roar. This isn't a blip—it's a cyclical pivot that could make or break your portfolio.

Goldman's analysts are waving a yellow flag on the rails, downgrading giants like Norfolk Southern, Union Pacific, and Canadian Pacific to Neutral. Why? Because rail's defensive glow is fading fast. These stocks have already outperformed by 2% this year, but the good times are over. Meanwhile, trucking—especially the less-than-truckload (LTL) carriers—looks like the next big opportunity. Let's unpack why.

The Rail Reality Check: Headwinds Ahead

Rail stocks are stuck in a perfect storm. Start with coal: CSX just reported a 27% year-over-year drop in coal revenue, and winter weather and network disruptions sent its Q1 earnings plunging 24%. Even its intermodal volumes—its “bright spot”—only rose 2%, barely offsetting the chaos.

The problem isn't just CSX. The entire sector faces existential risks: tariffs, weak consumer demand, and global freight volatility. Goldman's warning is clear: rail's days as a “defensive” investment are numbered.

Take a look at CSX's stock:

Notice the divergence? The stock price is flat, but EPS is cratering. This isn't a stock to “buy the dip”—it's a warning sign.

Trucking's Turn: The Cycle is Turning in Your Favor

Trucking stocks have been lagging, but that's exactly why now is the time to pounce. Goldman's “buy when fundamentals are as pressured as possible” mantra fits here like a glove.

Why? EPS recovery is coming fast. LTL carriers, in particular, will “play catch-up” as freight demand rebounds. Unlike rail, trucking's cost structure is more flexible, and pricing power is about to snap back. Even intermodal trucking—where rail and trucking overlap—will lag initially, but that's a temporary hiccup.

Let's compare rail vs. trucking's trajectory:

See how trucking lags rail? That's your entry point. When the freight cycle turns, these stocks will surge.

The Golden Opportunity: LTL and Logistics Leaders

So where do you strike? Focus on LTL carriers and asset-light logistics firms. These companies have the agility to capitalize on rising freight rates and shorter-term contracts.

• Saia Inc. (SAIA): A regional LTL powerhouse with a strong footprint in high-growth markets.
• XPO Logistics (XPO): A diversified logistics giant with exposure to both trucking and e-commerce.
• Knight-Swift Transportation (KNX): A consolidation play in trucking, merging scale with cost discipline.

Avoid the rails at all costs. Even CSX—despite a $35 price target—faces headwinds. Its coal decline and infrastructure spending (like the Blue Ridge Subdivision rebuild) are eating into margins.

The Bottom Line: Act Now or Be Left in the Dust

This isn't about being bearish on rail—it's about recognizing a cyclical shift. The rail sector's best days are behind it, while trucking is primed to deliver outsized returns.

Goldman's analysts are right: the freight cycle is turning, and trucking is where the action is. Don't let rail's past glory blind you to trucking's future. Buy trucking now—before the crowd catches on.

Ready to trade?
- Buy: SAIA, XPO, KNX
- Avoid: NSC, UNP, CP, CSX

The road to riches is paved with truck tires. Get moving.