Cormark Securities and the CITT recently conducted a brief survey in order to gauge freight transportation spending trends and the current state of the freight markets in Canada.

The results indicate that the entire industry appears more confident of volume and pricing growth next year on top of recovery this year, calling for 5-10% volume growth and 2-4% core pricing growth. The results also indicate that the level of competition amongst various providers appears to be moderating from high levels last year, given reductions in freight capacity and modest economic growth this year. While all three segments (rails, truckload and less-than-truckload) appear to be operating at suitable levels of capacity, shippers expect the rails and truckload carriers to retain the greatest pricing power next year.

We continue to prefer names with greater leverage to the global supply chain (e.g. rail intermodal and truckload) and those with a high degree of operating leverage to benefit from margin expansion in a recovering economy. (Research Comments)

2010 CITT-Cormark Survey: Road & Rail Industry Gaining Traction