U.S. carriers will benefit down the road from the sale of Vitran's domestic less-than-trailerload services, according to an industry update by Cowen and Co.
Vitran sold its U.S. business last month to an entity controlled by Matthew Moroun for $2 million. Industry watchers have already opined that Vitran's Canadian LTL business could be next.
As for the future of Vitran's former U.S. business, customer losses, Cowen wrote, are certainly possible during this period of post-sale adjustment, and Cowen has found that "some customers are contemplating taking their business to more stable carriers, while others may have already done so."
This won't present a capacity problem, because the U.S. LTL industry has enough space available to absorb any "Vitran leakage," Cowen said. If business heads into the domestic industry, it will give pricing a boost.
The analysts wrote pricing in the industry is currently solid and margins should start to expand as industry-wide tonnage increases. Cowen also sees the potential for truckload activity moving over into the LTL sector because of "meager pricing, utilization degradation from the new hours-of-service regulations, and a difficult driver market," the company wrote.
"Additionally, we would not be surprised if LTL stocks benefited from temporary reallocation from the rail space, which we have also viewed cautiously ahead of earnings," Cowen said.