After an awful first quarter for the U.S. transport industry with precipitous drops in freight volumes across the board, analysts will be watching a slew of quarterly results in the coming week in hopes of seeing some sign of a recovery on the horizon.

As well as kicking the tires to see how U.S. railroads and trucking companies are weathering this recession, analysts will be parsing executive comments for any indication that the worst may be behind us.

What we want to find out is if management teams are seeing any green shoots out there, said Todd Fowler, an analyst at KeyBanc Capital Markets. Is there anything that might show we have shoved off the bottom of this downturn?

The short answer is apparently no. While Fowler and other analysts say freight volumes appear to be stabilizing and that they expect the pace of decline to slow as 2009 progresses, a recovery this year is unlikely.

Things are not getting better, but they're not really getting that much worse right now, said Lee Klaskow, an analyst at Longbow Research. We don't think we'll see any growth until 2010.

Among the worst-affected transport stocks are those of trucking companies, which are now approaching the third anniversary of their very own freight recession.

While most big truckers are seen surviving the downturn due to strong management and healthy balance sheets -- although No. 1 U.S. trucking company YRC Worldwide Inc is seen as more troubled -- analysts say it is till too early to buy these stocks.

HAMMER DOWN?

According to a monthly index produced by the American Trucking Association's, truck tonnage fell 9.2 percent in February. While bad, it was not as bad as January's 10.8 percent decline or December's 12.5 percent drop.

Despite the tough quarter, some truckers have reported upside results. Werner Enterprises Inc , for instance, beat expectations in part due to fuel-saving measures.

But while analysts say operators like these are performing well in the downturn -- the trucking downturn began back in the third quarter of 2006 -- there are too many trucks chasing too little business, which has pushed prices down. The expectation for some time has been that falling volumes would bankrupt enough small firms to lift the big operators.

However, falling fuel prices have served as a lifeline for small mom and pop firms.

We're not seeing capacity exiting the market as quickly or as much as we had expected, KeyBanc's Fowler said. This has not resulted in an improvement in pricing that the industry has been hoping for.

Truck stocks tend to do well on the leading edge of a recovery because truckers are on the front line of the economy -- the first to prosper in a boom and the first to bleed when things go south -- usually starting about six to nine months ahead of real economic growth. Analysts say that point appears to be still some way off.

We are not ready to jump in with both feet on a large number of stocks yet, Stephens Inc analyst Thom Albrecht wrote in a note for clients.

Analysts are cautious on YRC, which is still restructuring its business and pre-reported first-quarter volume declines of 29 percent in its national network.

We continue to recommend investors avoid the stock given the lack of stability at YRCW and concerns surrounding future financial flexibility, R.W. Baird & Co analyst Jon Langenfeld wrote in a not for clients.

CHUGGING ALONG

More analysts are bullish on the U.S. railroads as there are signs they have been able to hold the line on pricing and have, according to Klaskow, incredibly low valuations.

Freight volumes at U.S. railroads are also off dramatically. For the first 14 weeks of 2009, volumes slid 17.2 percent, according to the Association of American Railroads

Of the four major railroads, so far only CSX Corp has reported first-quarter results -- Union Pacific Corp , Burlington Northern Santa Fe Corp and Norfolk Southern Corp are yet to come -- beating analyst expectations thanks to strong pricing and cost-cutting measures, although its net income fell 23 percent.

Is this as bad as it gets? UBS analyst Rick Paterson wrote in a note. If so we'll happily take it.

Morgan Stanley analyst William Greene wrote in a client note we now expect most rails to outperform our first-quarter estimates, thanks to strong pricing and cost reductions.

Longbow's Klaskow said the railroads' long-term potential should have the stocks trading higher, but said concern over the economy and attempts by rail customers to change the way the rails are regulated have depressed their stock prices.

Burlington Northern has the highest valuation of the four and is trading at a little over 12 times estimated earnings.

But Klaskow said investor fears the railroads could face a regulatory overhaul that introduce similar conditions to those preceding rail deregulation in 1980 were overblown.

The railroads may see a change in regulatory environment, but we're not going back to 1980, Klaskow said. It's not going to be the end of the world.

(Editing by Matthew Lewis)