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Transport ETFs Chug Along

NEW YORK (TheStreet) -- The transports fumbled through the second half of 2011 as macroeconomic headwinds weighed heavily on global growth prospects. In the New Year, however, this slice of the industrials sector appears to have gathered some steam.

In the opening month of 2012, shares of the iShares Dow Jones Transportation Average Index Fund (IYT) have risen 6% year to date, nearly double the broader SPDR Dow Jones Industrial Average Index ETF (DIA).

IYT's performance has been impressive and encouraging, an given its historical performance, the party my not be over just yet. While February is traditionally a tricky time for U.S. stocks, transports have historically held up well compared to the benchmark S&P 500 index.

In addition, top industry representatives are also painting a promising picture for IYT.

At the start of the week, the Association of American Railroads announced that the nation's leading railroads were on track to spend $13 billion this year to expand and upgrade the country's rail networks. The group notes that this would make 2012 a record breaking year in terms of capital expenditure. Last Friday, I explained how the rail industry could benefit from the ongoing Keystone XL pipeline debacle.

Matt Rose of Berkshire Hathaway's (BRK.A) Burlington Northern Santa Fe helped to fan the flames of optimism. Citing improving economic conditions in the U.S., Rose said in a MarketWatch interview that BNSF plans to expand operations and boost hiring in 2012.

Rail represents the largest single slice of IYT's sector breakdown. In total, names including Union Pacific (UNP), Norfolk Southern (NSC), Kansas City Southern (KSU) and CSX account for nearly 30% of the fund's index. UNP, IYT's top holding, accounts for 12% of its assets.

Delivery services, which account for an additional 21% of IYT's portfolio, have also seen some encouraging news. On Tuesday, leader United Parcel Services (UPS) stepped up to the earnings plate with an analyst-topping report. In the company's press release, CEO Scott Davis noted that the company "delivered record fourth quarter results in volume, revenue, and profitability." Looking to the year ahead, UPS feels that, while global growth will likely be mixed, strong earnings will continue.

The firm's beat follows fellow shipping giant FedEx (FDX), which disclosed a similarly strong quarterly report last month.

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