Heavy-vehicle traffic data suggests a resurgence in domestic freight volume growth in recent months, Forsyth Barr broker Suzanne Kinnaird says.
Activity levels appeared to have reached the bottom of the cycle in May and had since rebounded strongly.
Heavy-vehicle traffic growth typically followed a two-times multiplier to GDP, which was good for the near-term outlook for the broader economy in light of signs of a cyclical slowdown midyear, she said.
Growth in metropolitan areas appeared stronger than in regions, while the North Island was stronger than the South.
More specifically, Auckland growth appeared to be strong.
Wellington growth rates were positive, but on a gradual downward trend, and Christchurch and Dunedin were more subdued.
Christchurch appeared to be suffering from the slowing residential rebuild, Ms Kinnaird said.
Industry feedback suggested container and general freight volumes were soft.
Imports were particularly weak - both in freight and parcels - and the lower dollar
appeared to be behind a later seasonal surge in imports for peak season.
Conversely, exports commentary was more positive.
Domestic freight into Auckland was faring better than outbound to the regions, she said.
Domestic freight measures were key indicators of performance at Mainfreight (MFT) and Freightways (FRE).
New Zealand represented the largest market for both companies.
Of the two, FRE was more exposed to New Zealand but MFT's domestic business was more cyclical.
MFT remained Forsyth Barr's preferred stock in the sector.
MFT's lump growth profile of recent periods should be enhanced by currency benefits and growing network intensity in international operations through the 2016 financial year, Ms Kinnaird said.
Softer conditions in Australia and New Zealand would be more than offset by an improving international contribution to group earnings.
A broader industry slowdown, together with a reduced fuel adjustment factor, would dampen revenue growth in the first half of the 2016 financial year.
''Nonetheless, we expect MFT will have taken further industry share.
Moreover, with the economic picture improving, the outlook for the more important second half is more favourable.''
Depressed economic conditions in Australia, a more focused and competitive industry leader in Toll and additional facility costs made the going across the Tasman tough for MFT.
Local currency profitability was expected to have declined in the first half, she said.
Strong revenue growth was continuing at MFT United States, led by its air and ocean business and helped by people investment.
Domestic transport was investing in further warehousing, which would add additional operating expenditure.
The slow turnaround at Win Bosman continued with Belgium losses narrowing and revenue growth a feature. While margins remained thin, the rate of profit growth would be meaningful to group growth.
MFT increasingly understood its infrastructural needs in Europe and the necessity to expand its footprint and improve its cost competitiveness, Ms Kinnaird said.
