Landstar's Operating Backdrop Conditions Stuck in Slow Lane, but Pricing Has Stabilized

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 pure asset-based truckload carriers. Thus, it enjoys a variable cost structure with relatively low capital intensity that generates solid capital returns in excess of 30%, on average, over the past seven 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.