Although 2006 started off as another exceptional year for the U.S. freight transportation industry, the latter half of the year saw some softening in market conditions, particularly in the trucking sector. With U.S. economic growth expected to moderate in 2007, Fitch Ratings expects surface transportation freight demand to continue softening across the industry in 2007, although the effect of lower demand will not be seen equally across all regions or across all types of goods transported.
Barring a full-blown recession, however, the results of both railroads and truckers are expected to be relatively good, as consolidation and other secular issues override some of the consequences of slower economic growth, according to Fitch. As such, the credit quality of the U.S. freight transportation industry is generally expected to remain in-line with current levels through 2007, and, in some cases, may continue to strengthen despite slower demand growth, Fitch says.
For more information, go to www.fitchratings.com.
