What happened

It's a good day for the shipping sector, with stronger-than-expected earnings reports and analyst upgrades fueling strong gains for transportation stocks.

Shares of U.S. Xpress Enterprises (NYSE:USX) were up 23% as of 1 p.m. EDT, while C.H. Robinson Worldwide (NASDAQ:CHRW) and Genco Shipping & Trading (NYSE:GNK) each traded up more than 10% apiece.

So what

There was a lot of uncertainty surrounding transport stocks heading into this earnings season, with the second quarter marred by COVID-19 pandemic-related economic disruption and slowdowns. But so far those who have reported are holding up better than expected.

After markets closed Tuesday logistics specialist C.H. Robinson reported second-quarter earnings of $1.06 per share on revenue of $3.63 billion, easily topping analyst expectations for $0.60 per share in earnings on sales of $3.5 billion. The pandemic did have an impact: Revenue was down 7.2% year over year and income from operations decreased by 17%, but overall Wall Street was pleased with how well the business held up.

A ship at sea.

Image source: Getty Images.

Analysts were expecting a $0.13 per share loss for trucking company U.S. Xpress, but the company instead delivered a $0.18 per share profit on revenue of $422.5 million, $7 million better than expected. That led Bank of America to upgrade the company to a buy from neutral, with analyst Ken Hoexter saying the company is well positioned to benefit from a recovery in freight volumes. 

Genco didn't release earnings overnight, but the dry bulk shipping company did ride the wave higher after DNB Markets analyst Joergen Lian upgraded the company to a buy from a hold and gave the stock a price target of $8.90 per share, well above its $6.85 trading price.

Now what

Results are coming in stronger than expectations, but with the pandemic still impacting regions all over the globe it is too soon to declare these transport companies have smooth sailing up ahead. In a statement C.H. Robinson CEO Bob Biesterfeld called the environment "volatile," and said, "we are well positioned to weather the economic uncertainty in the months ahead and emerge stronger from this difficult time."

Biesterfeld is right to emphasize the uncertainty. While investors have every reason to get excited about the results that have been posted, they should be cautioned not to get ahead of themselves in assuming that a post-COVID-19 recovery has taken hold.