Fitch projects ‘solid’ growth for U.S. transportation sector

Domestic airports, ports and toll roads will see healthy growth in 2017 “despite longer-term questions brought on by shifting economic, trade and fiscal policies,” according to Fitch Ratings’ latest U.S. Transportation Trends special report.    The domestic transportation sector in the United States is poised for “solid” growth in 2017, according to Fitch Ratings.
   Domestic ports, airports and toll roads will see healthy growth in 2017 “despite longer-term questions brought on by shifting economic, trade and fiscal policies,” the firm said in its latest U.S. Transportation Trends special report.
   Fitch said all three segments saw “healthy” growth in 2016, outpacing that of U.S. gross domestic product (GDP).
   U.S. ports in 2016 saw overall container throughput increase 1.4 percent from 2015, down from a 3.9 percent year-over-year growth rate the previous year, but roughly in line with real U.S. GDP growth of 1.6 percent. Port growth gained momentum in the second half of the year, with volumes up 2.5 percent compared with the same 2015 period.
   This year, growth among ports across the country “will likely mirror that of the GDP,” said Fitch.
   This could actually be discouraging news for ports, however, as the Commerce Department late last week released its “advance” estimate for first quarter 2017 GDP growth, in which it said the U.S. economy grew just 0.7 percent for the quarter. Real GDP increased 1.6 percent in 2016 compared with a 2.6 percent growth rate the previous year.
   The ratings firm noted port capital improvements continue to focus on “big ship readiness,” as vessel size and their cargo loads continue to increase in size, “with increasing focus on enhancements to manage congestion and higher freight volumes inside and outside of port gates.
   “Continuing declines in freight rates and ongoing vessel overcapacity resulted in declining earnings for shipping lines through 2016, spurring M&A activity, bankruptcies, and reshuffling of shipping alliances,” the report said, warning that “strategic decisions by shipping partners may pressure U.S. ports and lead to lost service/cargo in some cases.
   “Shifting trade agreements or renegotiated tariffs may affect import/export volumes, with potential for adverse effects on certain routes; however, the full effects of these changes will extend beyond 2017,” it added.
   For airports, international hubs are expected to lead overall airport passenger traffic growth after passenger enplanements rose 3.5 percent year-over-year in 2016.
   “Growth in passenger enplanements, however, is and will continue to soften as carriers scale back on service additions,” Fitch Senior Director Seth Lehman said. Fitch is projecting 2.5 percent to 3 percent overall growth for airports in 2017.
   For toll roads, Fitch is projecting similar performance to 2016, with Southeast and Southwest facilities continuing to lead the way thanks to moderate economic and population growth in those regions.
   “Toll road revenues are positioned to grow faster than traffic as many authorities implement policies of inflationary toll increases,” Fitch Director Tanya Langman noted.