A comprehensive overhaul of U.S. trade policy, including the introduction of broad tariffs on most of the world, is roiling markets on Thursday. Among the hardest-hit sectors are transportation companies, including Union Pacific (UNP -3.94%), Forward Air (FWRD -22.23%), and Zim Integrated Shipping Services (ZIM -13.89%), all losing ground.
Forward and Zim, two stocks known for their volatility, are both down more than 14% as of 11 a.m. ET, while the more docile Union Pacific is off by 4%.
Reorienting shipping
The tariff announcement was expected, but the extent of the levies caught the market off guard. Assuming they remain in place, the tariffs appear designed to shift manufacturing from overseas locations to the United States. That could fundamentally impact the businesses of global shippers, including Zim and international logistics specialist Forward.
One of the crown jewels of Union Pacific’s portfolio is its railway that connects West Coast ports to the U.S. heartland. A significant change in import values could make those rail lines less valuable in the future.
There are still a lot of unknowns about the policies and their impacts. But the potential downside is significant, and on a day when markets are unsettled, it is leading to an outsized reaction among some of the transports.
Is now the time to buy transport stocks?
For those with a long-enough time horizon, there is reason for optimism. Tariffs could alter trade patterns, but they do not remove the need to physically move goods from one point to another. Companies like Union Pacific have irreplaceable assets, and over time they will be put to use, even in changing economic conditions.
But that is little solace for now. The one-two punch of uncertainty about tariffs and uncertainty about consumer demand is likely to lead companies to reduce inventories, at least in the near term, which means fewer goods to carry. Union Pacific had already forecast flat growth in 2025, and now even that modest projection could be at risk.
Unless there is a reversal in policy, these stocks could have further to fall.
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Union Pacific. The Motley Fool recommends Zim Integrated Shipping Services. The Motley Fool has a disclosure policy.
