Dry Van Load Weakness to Persist Near-Term for Landstar, but Cycle Will Eventually Turn

Landstar System ranks among the largest third-party logistics providers in the highly fragmented $120 billion-plus domestic asset-light truck brokerage space. Since Landstar doesn't own tractors, only a fleet of trailers, it has lower operating leverage than asset-based truckload carriers. Thus, it enjoys a variable cost structure with low capital intensity, generating solid capital returns near 33% on average over the past five years. Moreover, as one of the largest providers, Landstar has built a vast network of shippers, asset-based truckload carriers, and independent sales agents that support a wide economic moat, in our view.