The U.S. transportation sector will continue its steady operational and financial performance for through the second half of the year despite some challenges in the industry, according to the mid-year outlook report from Fitch Ratings.
The United States transportation sector will continue its steady operational and financial performance for through the second half of the year despite some challenges in the industry, according to the mid-year outlook report from Fitch Ratings.
The international financial ratings agency said in its report that ports throughout the U.S. should continue to see modest growth in the remainder of the year. West Coast ports in particular are still recovering from crippling port congestion that was caused by a contentious dockworker labor contract dispute between the International Longshore and Warehouse Union and the Pacific Maritime Association. “Though related congestion has largely dissipated, shippers are still weary and may keep some diverted cargo at East and Gulf Coast ports to diversify their delivery options in case there is future disruption,” said Fitch.
The report also noted that ports must continue to invest in infrastructure to prepare for the arrival of increasingly large containerships. As ocean carriers consolidate and continue to deploy larger vessels as a result, Fitch expects ports to follow suit and build their own cooperative alliances.
Passenger traffic at U.S. airports has increased 3 percent so far in 2015, but growth at “many large hub airports will remain constrained due to capital programs and associated borrowings even though traffic volumes are improving,” said Fitch Senior Director Seth Lehman.
Fitch said it also expects stability in the toll roads, with traffic growing at around 2 percent through the rest of 2015. Harsh winter weather in the Northeast and Midwest and plummeting oil prices limited growth in this sector early in the year.
Fitch noted several challenges to its “stable” outlook for the remainder of 2015, including underlying economic growth falling short of expectations, which would likely influence the current positive traffic/volume shifts across the various transportation sectors; rising interest rates, which could make borrowing costs more expensive and, therefore, make it more difficult to fund transportation and infrastructure projects; and the continued lack of Congressional action on a long-term transportation policy, which creates ongoing uncertainty in transportation investment funding at the state level.
Fitch: U.S. transportation outlook ‘stable’ for second half 2015
