FTSE 350: Industrial transport looking for a boost

Clarkson’s (CKN) financial division ran aground last year as global uncertainty meant marine capital markets were “all but closed”. The segment’s underlying operating profit plunged by more than three-quarters to £4.1m. As the world stage remains fraught with tension, it is questionable whether investors’ ‘wait-and-see’ approach will change in the near term. Shipbroking also looks likely to start 2020 on the back foot. The Baltic Dry Index, a bellwether of the shipping market, has been on a downward trajectory since September amid trade war uncertainties and fears of a global economic slowdown. The ongoing African Swine Fever epidemic could also continue to dampen shipped volumes of soybean feedstock. Despite the signing of a ‘phase one’ deal between the US and China, the index has already fallen by more than a quarter between the beginning of the year and mid-January.   

Moving from the sea to the skies, Signature Aviation’s (SIG) focus on business and private aviation means demand is connected to corporate confidence. Last year saw a reduction in discretionary flying, but the group managed to outperform the wider market. While US business and general aviation movements only increased by 0.5 per cent in the third quarter, Signature’s fixed base operations network achieved organic growth of 1 per cent. The group is well positioned for a recovery in the cycle as restricted airport space and long-term leases create barriers to entry.

Back on land, as Brexit uncertainty continues to hamper business confidence in the UK, Royal Mail (RMG) has downgraded its expectations for letter volumes. Digital alternatives are already driving a decline in the number of letters being sent but, excluding political party mailings, the group now expects letter volumes to fall by 7-9 per cent in 2020 and 6-8 per cent in 2021.