The trucking industry is experiencing a driver shortage. As a result, labor and shipping costs are on the rise, and the costs are mainly being borne by retailers. Without uptake in autonomous vehicles, driver costs are likely to continue rising. Cargojet, which controls 95% of the overnight market in Canada, has been investing in planes and distribution and experimenting with an additional weekly night service. Rising populations are pushing the demand for global air travel, business and commercial jet purchases, international cargo shipping, and coal exports.

Company specific thoughts:

The rail sector has three main characteristics: limited competition, high barriers to entry, and sustainable demand. They are likely to drive rate increases, volume growth, and margin expansion over the long term, supported by efficiency initiatives and the implementation of smart technology. The industry looks set to generate increasing free cash flow that will boost shareholder returns. For airlines, as for other transportation sectors, changing demographic patterns is a key theme. Air Canada has positioned itself to take advantage of changes, and as much as 90% of recent capacity additions have come from international routes. Free cash flow levels are expected to exceed $2Bn after 2022, enabling Air Canada to expand in the future.


Industrials: Up close

The future will be determined by those who are willing to reinvest, adapt and turn future threats into opportunities.