The trucking industry has long been a leading indicator of market turns. For example, revisit the recent history of YRC Worldwide (NYSE: YRC), a leading less-than-truckload (LTL) trucking company.
Last summer, YRC’s CEO Bill Zollars was pounding the table about the slowdown he was seeing in his business while the market continued to achieve new highs and several months before the market downturn. After bottoming in December, the freight transportation industry is starting to see business pick up again, possibly indicating an eventual upturn in the overall economy.
An ETF that tracks an index of the $100B+ trucking industry would be a useful investment vehicle for an investor that uses a deep value, commodity hedging or sector rotation strategy. Unfortunately, trucking ETFs don’t yet exist. However, there is a transportation ETF.
The iShares Dow Jones Transportation Index Fund (NYSEArca: IYT) tracks an index of 22 leading transportation companies in the airline, industrial transporation and general industrial services industries. The index is price weighted, so the index composition is constantly changing. Leading holdings as of March 13 include railroads Union Pacific (NYSE: UNP) and Burlington Northern (NYSE: BNI), package delivery companies Fedex (NYSE: FDX) and United Parcel Service (NYSE: UPS) and bulk-shipper Overseas Shipholding (NYSE: OSG).
IYT does own a handful of truckers including Con-Way (NYSE: CNW), YRC and JB Hunt (Nasdaq: JBHT). For more information, see the iShares website.