There appears to be progress in resolving the trade war between the United States and China, and the companies that are responsible for hauling the goods imported into the United States are rallying on the prospect of having more work ahead.
Shares of XPO (NYSE: XPO) are up 14% as of 11:30 a.m. ET on Monday, and shares of Old Dominion Freight Line (NASDAQ: ODFL) and Saia (NASDAQ: SAIA) are each up more than 9% apiece.
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Image source: Old Dominion Freight Line
Eliminating uncertainty
Tariffs and trade wars can ripple through vast portions of the economy, but few sectors are more directly impacted than transportation stocks. Truckers including XPO, Old Dominion, and Saia are responsible for the last leg of the journey for goods made overseas and brought in through ports, hauling goods from distribution centers to their final destinations.
If tariffs slow down imports, that means less business for the truckers. With that in mind, investors were understandably nervous about these stocks as rhetoric, and tariff rates, heated up in recent months.
Over the weekend, the U.S. and China scaled back recent tariff escalations for at least 90 days after making progress toward a new trade deal. Negotiations continue, but Wall Street is rallying on the signs of progress.
Is now the time to buy trucking stocks?
Investors should be warned that some damage is likely already done. With U.S. ports quiet and few ships sailing toward the West Coast, there will be at least some downtime even if large importers put in new orders today. The second quarter is likely to see the impact of the lag no matter what happens from here.
But a short-term slowdown is better than a long-term slowdown, and these companies are all healthy enough to weather a few bad months.
A lot can go wrong from here. Trade talks could break down, or large importers spooked by the last six weeks could be gun-shy about immediately resuming large-scale imports. Investors considering buying in today should be prepared for some rough road ahead as the headlines are hopefully turned into firm agreements.
But for those interested in steady, reliable stocks, these truckers are among the best run in the business. Patient, long-term investors will likely do well over time buying into any one of XPO, Old Dominion, or Saia today.
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Lou Whiteman has positions in XPO. The Motley Fool has positions in and recommends Old Dominion Freight Line. The Motley Fool recommends XPO and recommends the following options: long January 2026 $195 calls on Old Dominion Freight Line and short January 2026 $200 calls on Old Dominion Freight Line. The Motley Fool has a disclosure policy.
