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Volume for most freight groups expected to decline

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Dry Bulk,


The outlook for the North American railroads industry has been revised to negative from stable, Moody's Investors Service says in a new report.

The change comes as shipments of most freight groups, including coal and intermodal, are expected to continue falling. Over the next 12 - 18 months, total freight volume is likely to decline 1.75 - 3%, while industry revenue will remain relatively flat.

Moody's expects the recent drop in coal shipments to accelerate, forecasting a decline in the next 12 - 18 months in the low teens. Absent a substantial shift in federal policy, technological innovations or a significant and sustained increase in natural gas prices, demand for thermal coal from US utilities is subject to a secular decline of on average about 7%/yr over the next 10 years.

North American railroads also face pressure as trucking capacity expands. As carriers take delivery of a large number of previously ordered trucks, trucking capacity turned to a surplus in 2019.

"Heightened competition from truck carriers for intermodal and certain other freight continues to weigh on the North American railroad sector," said Rene Lipsch, Vice President Senior Credit Officer at Moody's. "The excess in trucking capacity has been a primary driver of softening pricing gains in the industry."

To access the report, click here.

Read the article online at: https://www.drybulkmagazine.com/dry-bulk/05112019/volume-for-most-freight-groups-expected-to-decline/

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