A Morgan Stanley (NYSE: MS) survey measuring COVID-19-related disruption in transportation markets shows “glimpses of a peak” – a peak in disruption that is.
The firm’s bi-weekly survey of more than 400 carriers, shippers and brokers revealed that negative expectations for conditions three months from now was lower than the negative impact on operations currently being experienced by participants for the first time since the survey began in late February.
The three month-forward sentiment showed that 74% of respondents expect a “medium” or “high” impact from the coronavirus outbreak on their business three months from now, lower than the 83% that said the impact was “medium” or “high” currently.
In the prior survey published two weeks ago, 80% of those polled expected a “medium” or “high” impact on their business in three months’ time.
Morgan Stanley’s transportation equity research analyst Ravi Shanker believes the results imply “respondents expect the impact to peak within the next three months and start to recover post that period.”
Shanker continued, “Forward expectations suggest we are moving toward peak disruption and could be poised for a V-shape recovery (as we expect for freight transportation – even if the broader economy settles into a U or L-shaped recovery),” Shanker continued.
While forward-looking sentiment improved modestly, current sentiment soured as disruption in the market continues due to shelter-in-place and self-quarantine ordinances.
Almost 100% of respondents said that the coronavirus is currently having an impact on their business, which was similar to the results seen two weeks ago. Further, 83% of those surveyed believe that the current impact is “medium” or “high,” an increase from 75% in the prior survey.
When looking out over the next 12 months, roughly 60% of respondents see the disruption having a “highly negative” or “somewhat negative” net impact. Those expecting the net impact to be “highly negative” over the next year increased to 19% from 13%.
Shanker said that the comments provided in the survey have shifted from “uncertainty” to “all-out concern.”
There was some positivity in the report. Of those expecting a “somewhat positive” or “highly positive” net impact over the next year, shippers were the most positive at 30%, followed by brokers and carriers at approximately 20% each.
“One datapoint does not make a trend but this update’s results suggest we could be returning to a relative ‘normal’ sooner than some expect,” Shanker wrote.
