While logistics oversees the overall supply chain strategy, including inventory management, warehousing, and customer service, the freight market refers to the industry involved in the transportation of goods from one location to another using various modes such as road, rail, air, and sea. According to a report by Precedence Research, the global freight transport market is valued at $34.53 billion in 2024 and is expected to reach $100.81 billion by 2034, representing a compound annual growth rate (CAGR) of 11.31%. North America is estimated to have a market size of $11.74 billion in 2024 and is forecasted to grow at a robust CAGR of 11.45% during the same period. Trade within the North American region, particularly between the United States, Mexico, and Canada, plays a vital role.
In 2023, the US transborder freight flows with these countries totaled $1.57 trillion. Several factors, such as increasing international trade, the expansion retail industry, and the growth of e-commerce platforms are boosting the demand for secure and faster freight services. Similar to other industries, the freight market is also witnessing a rise in sustainability efforts and technological integration. Artificial intelligence, in particular, is revolutionizing the industry by enhancing efficiency and optimizing operations. AI applications, such as real-time inventory monitoring, smart warehousing, traffic management, and freight-matching platforms, are streamlining freight processes.
Companies Brace for Tariff-Induced Challenges
President-elect Donald Trump’s proposed tariffs on key trade partners such as China, Mexico, and Canada could severely impact the US transportation industry. Sector experts warn that these tariffs could undermine the growth of North American trade and warned that the proposed trade policies could inadvertently harm the US businesses Trump aims to support. Jason Miller, interim chair of supply-chain management at Michigan State University, explained that higher tariffs would drive up prices, reducing demand and leading to a decline in freight movement. This trend could pose revenue risks for major companies dependent on freight activity.
On December 13, Reuters reported that Trump’s tariff strategy, aimed at creating jobs and compensating for lost revenue from planned tax cuts, effectively acts as a new tax on consumers, whose spending drives the US economy. According to Mary Lovely, a senior fellow at the Peterson Institute for International Economics, the tariffs could significantly disrupt trade flows. She predicts that the new administration could implement these measures as early as the second or third quarter of 2025.
Trucking, which accounts for about one-third of U.S. transportation, has been particularly vulnerable to tariff-induced economic slowdowns. Dean Croke, principal analyst at DAT Freight and Analytics, noted that tariffs imposed during Trump’s previous term led to a trucking recession throughout most of 2019. The industry is already experiencing its longest downturn, driven by flat industrial production and overcapacity from the pandemic-era shipping boom. Cross-border trade between the U.S., Mexico, and Canada remains one of the few bright spots for the trucking sector. In September 2024, the value of cargo transported across these borders reached $88.5 billion, a 7.7% increase from the previous year. However, new tariffs could jeopardize growth opportunities. The proposed tariffs could also derail railroad companies’ plans for growth.
Freight remains an uncertain yet essential industry, serving as a cornerstone for global trade and a vital base for manufacturing. If manufacturing gains momentum in the US, the freight sector may play an even more critical role in supporting supply chains and economic growth. With that in context, let’s take a look at the 11 best freight stocks to buy now.
A fleet of rented trucks parked alongside a warehouse, emphasizing the company’s logistics services.
Our Methodology
To compile our list of the 11 best freight stocks to buy now, we scanned transportation ETF plus online rankings to compile an initial list of 25 companies that offer freight services. Then we used Insider Monkey’s Hedge Fund database to rank 11 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
11 Best Freight Stocks To Buy Now
11. Old Dominion Freight Line, Inc. (NASDAQ:ODFL)
Number of Hedge Fund Investors: 38
Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is a leading provider of less-than-truckload (LTL) freight transportation services in North America. The company’s extensive network of 250 service centers and terminals spans the United States, Canada, and Mexico. The company offers a wide range of logistics solutions, including expedited, and intermodal services. Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is known for its high standards of service, with 15 consecutive years of being named the number one national LTL provider by Mastio & Company.
To sustain its growth and maintain its market leadership, Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is leveraging technology to enhance operational efficiency, improve customer experience, and drive cost savings. The company is implementing advanced systems for route optimization, real-time tracking, and data analytics, which aims to significantly improve its ability to manage shipments and provide customers with transparent, real-time information. Old Dominion Freight Line (NASDAQ:ODFL) has also announced a 4.9% general rate increase, effective December 2, to offset rising costs and support ongoing investments in service quality and technology.
Despite current economic challenges, Old Dominion Freight Line, Inc.’s (NASDAQ:ODFL) management remains confident in the company’s ability to capitalize on future growth opportunities. The company’s disciplined approach to pricing and yield management allows it to consistently improve its yields, offsetting cost inflation and supporting additional investments in capacity and technology.
10. J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT)
Number of Hedge Fund Investors: 39
J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is a leading provider of freight shipping services and offers a diverse portfolio of solutions that includes Intermodal, Dedicated Contract Services, Truckload, and Integrated Capacity Solutions. J.B. Hunt Transport Services, Inc.’s (NASDAQ:JBHT) client base spans industries such as retail, manufacturing, and consumer goods.
To drive further innovation and solve core challenges, J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) has partnered with UP.Labs to establish the Logistics Venture Lab. The collaboration aims to launch up to six startups over the next three years, focusing on key areas such as brokerage, intermodal, and truckload services. The Logistics Venture Lab will leverage big data, generative artificial intelligence, and emerging technologies to develop transformative solutions. The Logistics Venture Lab will bring together several entrepreneurs, product leaders, and technologists to diagnose and address problems in the company’s logistics and freight transportation space. The company aims to repair margins through cost management and strategic capital allocation while focusing on high-quality service and solutions tailored to customer needs.
J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is also actively incorporating alternative-powered vehicles and biogenic fuels into its fleet, to appeal to clients who prioritize sustainable and eco-friendly services. The company has added 20 Nikola Tre fuel cell electric vehicles (FCEVs) to its fleet and is doing a pilot program with Clean Energy featuring the new Cummins X15N engine, which uses renewable natural gas (RNG).
9. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Investors: 43
United Parcel Service, Inc. (NYSE:UPS) is a global leader in package delivery and supply chain management. The company offers a variety of freight shipping services, including air, ocean, ground, and express shipping. United Parcel Service, Inc.’s (NYSE:UPS) major clients include the United States Postal Service (USPS) along with other small businesses and large corporations across various industries.
Through its Digital Access Program (DAP), United Parcel Service, Inc. (NYSE:UPS) is providing competitive shipping rates without requiring a dedicated UPS account. By doing so, the company is focusing on increasing volumes to leverage economies of scale and lower costs. This strategy is proving to be highly beneficial, in the first nine months of 2024, DAP generated $2.3 billion in global revenue. The company expects to exceed $3 billion in revenue for the full year. Moreover, United Parcel Service, Inc. (NYSE:UPS) is expanding its temperature-sensitive healthcare logistics capabilities, which is a growing and high-margin segment. The company recently announced its acquisition of Frigo-Trans and its sister company BPL, a European leader in temperature-controlled transportation and warehousing. The acquisition is expected to close by Q1 2025.
For the 2024 holiday season, United Parcel Service, Inc. (NYSE:UPS) has announced to addition of over 200 flights to ensure robust and reliable service. The company is also collaborating closely with customers to manage volume expectations and is using RFID technology and network planning tools to optimize its operations.
8. Canadian National Railway Company (NYSE:CNI)
Number of Hedge Fund Investors: 44
Canadian National Railway Company (NYSE:CNI) is a Canadian freight railway company that operates a vast network connecting Canada, the US, and Mexico. The company transports a diverse range of products for manufacturers, energy producers, and agricultural firms seeking reliable cross-border logistics solutions.
Canadian National Railway Company (NYSE:CNI) is focusing on growing its intermodal business, particularly through Western Gateways, and is leveraging its end-to-end supply chain efficiency to attract more traffic. The company is also investing in technology to enhance maintenance scheduling, reduce dwell times, and improve overall reliability. Additionally, the company is investing in terminal capacity and infrastructure, including the Greater Toronto Area fuel terminal and plant capacity on both sides of the border. Despite the softer domestic intermodal market, international volumes are expected to drive growth, driven by strong demand for Canadian and US grain. For the fourth quarter, Canadian National Railway Company (NYSE:CNI) is forecasting sequential and year-over-year growth in intermodal business.
Canadian National Railway Company (NYSE:CNI) is also taking proactive steps to optimize resources. This includes stopping hiring in surplus areas and furloughing non-essential personnel, and locomotives. These measures are aimed to help maintain fluidity and reduce costs while ensuring the ability to scale up quickly as volumes recover.
7. Norfolk Southern Corporation (NYSE:NSC)
Number of Hedge Fund Investors: 47
Norfolk Southern Corporation (NYSE:NSC) is a premier transportation company specializing in rail freight services. The company serves the Eastern US with a focus on intermodal, coal, and automotive shipments. Norfolk Southern Corporation’s (NYSE:NSC) extensive rail network connects key manufacturing and consumer markets and enables clients to move goods efficiently and sustainably.
Norfolk Southern Corporation (NYSE:NSC) is focused on diversifying its revenue streams and expanding into new markets. The company is actively engaging with customers and partners to develop innovative solutions and service products that meet their evolving needs, particularly in the merchandise business, which has seen consistent growth despite headwinds in certain sectors like automotive and metals. Norfolk Southern Corporation (NYSE:NSC) plans to achieve an operating ratio of less than 60% in three to four years by emphasizing a disciplined and data-driven management style, aimed at reducing costs while improving service reliability and maximizing asset utilization. The company has already seen an increase in fuel efficiency, which has contributed to an improvement in the adjusted operating ratio.
Furthermore, Norfolk Southern Corporation (NYSE:NSC) is investing in advanced technologies and infrastructure that are expected to drive strong demand, particularly in the international and domestic intermodal markets.
6. XPO, Inc. (NYSE:XPO)
Number of Hedge Fund Investors: 48
XPO, Inc. (NYSE:XPO) is a leading provider of freight transportation services, headquartered in Greenwich, Connecticut. The company operates globally and focuses on two main business segments: North American Less-Than-Truckload (LTL) and European Transportation. XPO, Inc. (NYSE:XPO) serves a wide array of industries, such as retail, e-commerce, manufacturing, food and beverage, and consumer goods.
XPO, Inc. (NYSE:XPO) is making substantial investments in its network to ensure long-term growth and operational efficiency. Over the past three years, the company has added nearly 15,000 trailers and over 4,000 tractors and opened 21 of 28 new service centers acquired in December 2023. These investments are designed to build density improve service, and reduce costs. By in-sourcing more linehaul miles, XPO, Inc. (NYSE:XPO) aims to reduce its reliance on third-party carriers from 13.6% in Q3, with a target of bringing it below 10% by the end of 2024. This initiative has already saved the company $39 million in Q3 alone and contributed to a 40% reduction in purchased transportation costs year-over-year. Additionally, XPO, Inc. (NYSE:XPO) is focusing on managing labor costs, fleet maintenance costs, and other variable expenses.
XPO, Inc. (NYSE:XPO) has also introduced several high-margin accessorial services, such as retail store rollouts, Must Arrive By Date, and Trade Show services, which are gaining traction with customers. These services not only increase revenue but also strengthen customer loyalty. XPO, Inc.’s (NYSE:XPO) goal is to increase accessorial revenue to 15% of total revenue over the next five years.
5. CSX Corporation (NASDAQ:CSX)
Number of Hedge Fund Investors: 51
CSX Corporation (NASDAQ:CSX) is a leading freight transportation company in North America that provides rail-based freight services, intermodal transportation, bulk tank trucking, and rail-to-truck transload services. The company has a network spanning 23 states and the District of Columbia. CSX Corporation (NASDAQ:CSX) serves a diverse customer base across various industries, including chemicals, automotive, metals, forest products, and coal.
CSX Corporation (NASDAQ:CSX) has been focusing on improving its operational efficiency and service reliability. The company is leveraging advanced technologies, such as predictive maintenance and automated train operations, to improve efficiency and reduce operational costs. The company has also implemented real-time data analytics to optimize its network, reduce transit times, and improve on-time performance. By maintaining a strong service product, CSX Corporation (NASDAQ:CSX) aims to capitalize on opportunities for growth, particularly in the merchandise and intermodal segments, where customers are increasingly looking for reliable and cost-effective transportation solutions. CSX Corporation’s (NASDAQ:CSX) sales and marketing team is also focusing on converting truck volumes to rail, particularly in the merchandise sector, where it has seen strong growth in chemicals, food, and forest products.
CSX Corporation (NASDAQ:CSX) is also focusing on fuel efficiency, which not only reduces operational costs but also aligns with the growing demand for environmentally friendly transportation options. The company is also interested in alternative fuels and exploring innovative solutions to further enhance its sustainability efforts.
4. Canadian Pacific Kansas City Limited (NYSE:CP)
Number of Hedge Fund Investors: 52
Canadian Pacific Kansas City Limited (NYSE:CP) is a transcontinental railway freight operator that operates an extensive network spanning over 20,000 track miles, connecting more than 30 ports, 30 auto facilities, and numerous transload facilities and shortlines across North America. Canadian Pacific Kansas City Limited (NYSE:CP) serves a diverse range of industries, including agriculture, energy, chemicals, automotive, and consumer goods.
Canadian Pacific Kansas City Limited (NYSE:CP) is uniquely positioned as the only railroad that connects the United States, Canada, and Mexico through a single network and has major logistics hubs in Bensenville and Dallas, which serve as critical nodes for automotive logistics. The company is exploring deals to enhance its services for both auto parts and finished vehicles. Moreover, Canadian Pacific Kansas City Limited (NYSE:CP) is focusing on aligning its rail networks with other railway operators such as CSX Corporation, which will connect shippers in Mexico, Texas, and the Southeast US. The alignment is expected to drive significant growth in the intermodal business, especially in Mexico, where demand for efficient cross-border transportation is increasing.
Moreover, Canadian Pacific Kansas City Limited (NYSE:CP) is also focusing on improvements in train speeds, terminal dwell times, and train capacity as well as developing customer-centric solutions to capture new business opportunities. The company is exploring extended lengths of haul for forest products clients and is also expanding its refrigerated product offerings to attract more truck volumes to its network.
3. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Investors: 54
United Airlines Holdings, Inc. (NASDAQ:UAL) is a major global carrier, offering passenger and freight services across a vast network of domestic and international routes. The company serves business and leisure travelers, as well as freight customers requiring fast and reliable air transport. United Airlines Holdings, Inc. (NASDAQ:UAL) operates a fleet of over 1,300 aircraft and serves more than 340 destinations across six continents.
United Airlines Holdings, Inc. (NASDAQ:UAL) is making significant investments in advanced technology to enhance its cargo and logistics capabilities. The airline is enhancing its cargo management system which will allow for real-time tracking of shipments, enhanced security measures, and more efficient handling processes. Furthermore, the company is partnering with global freight forwarders and logistics companies enabling it to offer a comprehensive range of services, from door-to-door delivery to specialized cargo handling. By working closely with these partners, United Airlines Holdings, Inc. (NASDAQ:UAL) aims to meet the diverse needs of its cargo clients. Additionally, these partnerships allow for shared resources and expertise, which can lead to cost efficiencies and operational improvements.
United Airlines Holdings, Inc. (NASDAQ:UAL) is also exploring the use of sustainable aviation fuels (SAF) and other green technologies to further enhance its sustainability efforts. By prioritizing sustainable operations, United Airlines Holdings, Inc. (NASDAQ:UAL) aims to attract customers who are increasingly focused on environmental responsibility, while also ensuring long-term operational efficiency.
2. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Investors: 57
Delta Air Lines, Inc. (NYSE:DAL), headquartered in Atlanta, Georgia, is one of the world’s leading airlines, known for its extensive global network. The company provides air freight services to both domestic and international customers. Delta Air Lines, Inc. (NYSE:DAL) has a fleet of approximately 1,273 aircraft and offers cargo services through various channels.
Delta Air Lines, Inc. (NYSE:DAL) is increasingly leveraging its cargo and logistics capabilities to diversify its revenue streams and enhance its competitive edge. The company has been actively upgrading its cargo facilities and enhancing its digital tools to provide customers with real-time tracking and visibility. Furthermore, Delta Air Lines, Inc. (NYSE:DAL) is also focusing on strategic partnerships to expand its cargo network and reach new markets. These partnerships allow the company to optimize routing, reduce transit times, and improve efficiency as well as enable the company to offer a more comprehensive and integrated cargo solution.
Delta Air Lines, Inc. (NYSE:DAL) is also investing in artificial intelligence (AI) and the Internet of Things (IoT), to enhance operational efficiency and customer service. AI-driven predictive analytics help the airline to optimize cargo load planning, reduce delays, and improve on-time performance. IoT sensors and smart tracking devices provide real-time data on cargo conditions, ensuring that valuable shipments are handled with the utmost care.
1. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Investors: 78
Union Pacific Corporation (NYSE:UNP) is one of the largest and most recognized freight railroad companies in North America. The company operates an extensive network that spans 23 western states, with a network of over 32,000 miles of track. Union Pacific Corporation (NYSE:UNP) plays a critical role in the supply chain for numerous industries including automotive, chemicals, construction, and agricultural.
Union Pacific Corporation (NYSE:UNP) is focusing on expanding mainline and terminal capacities, constructing new sidings, and extending existing ones. These investments are particularly crucial in key growth areas such as the Pacific Northwest, where the company is enhancing its ability to handle soda ash and export grain, and in the Southwest, where it is improving its intermodal capabilities. Additionally, Union Pacific Corporation (NYSE:UNP) is investing in advanced technologies, such as GPS tracking for containers and rail pulse, to provide greater transparency and efficiency in its operations. These investments are aimed to improve service reliability and enhance the customer experience by providing real-time tracking and better communication.
Union Pacific Corporation (NYSE:UNP) is also expanding its service offerings to meet the evolving needs of its customers. For example, the company recently started a new domestic intermodal service that has successfully reduced transit times from Southern California to the Chicago area by two days. This improvement has attracted new customers and solidified existing relationships. Additionally, Union Pacific Corporation (NYSE:UNP) is extending its network reach through strategic partnerships with other railroads and short lines.
While we acknowledge the potential of Union Pacific Corporation (NYSE:UNP) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than UNP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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