While transport and logistics companies aren't exactly recession proof, even in hard times their services are still required as manufacturers still require inputs for and outputs from their production process to be delivered, and retailers and customers still buy and sell goods which require freight services even though it may be in lower volumes.
A key benefit of the following companies is that they each hold a significant share in their respective markets. They also each provide services at different points along the freight and logistics chain (with some cross-over) and their long-term growth potential is appealing.
The $5.4 billion Asciano Ltd (ASX: AIO) had a horrendous beginning to listed life after its split from Toll Holdings Limited (ASX: TOL) prior to the GFC. Those worrisome days for shareholders when Asciano was heavily indebted and the market was betting it wouldn't survive are now behind the port and rail operator. With strategic port, stevedoring and rail operations which provide services to a wide range of customers and industries, Asciano is closely tied to the long-term future growth in international trade of Australia.
Unlike the other two transport stocks mentioned here, Brambles Limited (ASX: BXB) provides investors with global exposure. Having expanded its pallet, crate and container pooling operations to most major economic regions, Brambles is well diversified by both region and customer. The general increase in economic activity is a long-term volume tailwind for Brambles, but importantly the company also has significant growth potential from simply adding more customers to its current pooling operations.
Despite its $2 billion market capitalisation Qube Holdings Ltd (ASX: QUB) still seems to fly largely under the radar. Chaired by the experienced Mr Chris Corrigan, Qube has manoeuvred itself into a major player in wharf-side logistics at all of Australia's capital city ports as well as 24 regional ports. Like Asciano, the group has a large exposure to international trade movements into and out of Australia.
Foolish takeaway
When it comes to identifying investment candidates to buy as part of a long-term portfolio, the benefit of a long-term tailwind is essential. Certain transport, freight and logistics businesses such as the ones mentioned above own strategic assets and enjoy significant barriers to entry. Companies with sustainable competitive advantages, coupled with a tailwind, if purchased at a reasonable price can offer above average long-term returns to investors.