U.S. Transportation Sector on Healthy Path for Remainder of the Year

Despite uncertainly surrounding the U.S. administration’s policies concerning upcoming spending on infrastructure, the outlook for the U.S. transportation sector is expected to be healthy for the remainder of the year.

According to Fitch Ratings’ midyear outlook on the sector, large transportation companies will still need to borrow debt to serve ongoing infrastructure renewal needs and provide congestion relief. Low fuel prices, however, should keep travel costs affordable.

A cautious growth trajectory is seen for public-private partnerships (P3s), as state and local governments explore P3 financial models. However, “there remains a scarcity of funding and a lack of understanding around the P3 structure, meaning most infrastructure needs will continue to be financed via more traditional means,” said Senior Director Scott Zuchorski.

Growth in passenger traffic at U.S. airports is expected to level off in the near term. “Large-hub airports are still the strongest performers in the aggregate, though smaller regional airports are now showing stronger performance as well,” said Senior Director Seth Lehman. Volume growth for U.S. ports should reflect that of GDP for the rest of 2017. However, “shipping company mergers, changing alliance structures and fluctuating freight rates will shift volumes, which could alter contractual protections for select ports,” said Director Emma Griffith.

Moderate growth is expected for toll roads for the remainder of the year. Stronger revenue growth is expected from inflationary toll increases. “Toll roads still face political risk, including federal funding uncertainty and state tolling opposition,” said Director Tanya Langman.

– Adam Fusco, associate editor

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