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Rail News: Rail Industry Trends

Moody's lowers North American railroads' outlook to 'stable'


Citing slowing freight volumes, Moody's Investors Service has revised its North American railroad industry outlook to "stable," down from "positive," according to a report issued yesterday. 

"The change is in light of our expectations of a more pronounced slowdown in freight volumes over the next 12 to 18 months, led by a steepening decline in coal shipments and slowing intermodal growth," said Moody’s Vice President and Senior Credit Officer Rene Lipsch in a prepared statement.

Coal shipments will drop by 5 percent to 7.5 percent during that same period, as utilities "increasingly favor cheaper natural gas and U.S export of thermal coal is challenged following a sharp decline in seaborne prices," Moody's officials said.  

Intermodal freight is projected to grow by 1.5 percent to 2.5 percent, but at a slower pace than the 5.3 percent growth registered in 2018.

Moody's projects total freight volume to rise 0.25 percent to 1 percent, and maintains its forecast for pricing gains of 2.5 percent to 3 percent. Combined, these factors "should drive industry revenue growth of 2.75 percent to 4 percent during the next 12 to 18 months," Moody's officials said.


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