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.