Forsyth Barr broker Lyn Howe said falling business confidence was causing concern for the freight sector.
The sharp fall in confidence in November to an eight-year low, if sustained, would likely lead to lower domestic freight activity.
Air travel could follow. Domestic and outbound aviation was more correlated to consumer confidence than business confidence.
While post-election consumer confidence remained elevated, it tended to follow business confidence through the cycle.
''While a sharp decline in business confidence is a concern, we are also wary the index can be volatile. Further evidence of a sustained fall in the coming months will be necessary before we begin to lower our earnings and growth assumptions.''
Forsyth Barr was neutral to negative on the transport sector due to valuation concern. It retained a preference for transport operators compared to the very elevated valuations of transport infrastructure players, Ms Howe said.
Mainfreight, Air New Zealand (neutral rating)
Mainfreight was undergoing a period of stronger earnings growth, which was believed to be more than factored into its share price, she said.
Any signs of momentum slowing in either New Zealand or Australia might eat into some of the recent share price gains.
Air NZ had navigated through the competitive environment well and was taking a leadership position in managing capacity. Demand growth remained supportive but with oil prices higher in recent weeks, there was a risk to both 2018 and 2019 earnings.
Auckland Airport, Port of Tauranga, Freightways (underperform)
Transport infrastructure players Auckland Airport and Port of Tauranga were trading at elevated multiples, she said.
Auckland Airport's earnings growth path through the next five years was much flatter than the past five years given its regulatory price reset, higher interest and depreciation costs, and slow passenger number growth.
''We see some regulatory risk as a result of the Commerce Commission's aeronautical pricing review.''
New Zealand residents accounted for about 45% of international passengers at Auckland Airport. Slowing growth from New Zealand outbound passengers would add to the broader capacity-driven slowdown taking place, expected to continue for the next six to 12 months, Mr Howe said.
The outlook for Port of Tauranga was positive, with scope for sustained earnings growth.
Freightways was cheaper than Mainfreight on one-year forward multiples. However, its growth profile was more subdued due to the limited operating advantage available in its Express Package operations, Ms Howe said.
But the export log trade was rebounding and the near-term outlook appeared favourable.
Higher export prices and robust demand from China and other importers were driving higher volumes, she said.
Chinese demand, helped by house building growth, remained the dominant force in the country's log export market. China accounted for about 72% of New Zealand's log exports.
