Freight Slump Expected To Continue Into 2008


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The outlook reflects the effects of the U.S. housing slump and the global deterioration in credit markets. Fitch predicts U.S. economic growth of 1.7 percent next year, down from 1.8 percent for 2007.

Housing and retail demand are more likely to affect truckers such as YRC Worldwide Inc., the nation's biggest, than railroads, Brown said. Trucks carry more retail goods, while railroads tend to move bulk products such as coal and grain, he added.

Trucking companies stepped up truck purchases in 2006 to beat new, costlier emissions rules that took effect this year. That increased capacity helped drag down the companies' performance this year, Brown said.

Railroads have been more successful than trucking companies in passing along rate increases to help offset falling volumes, a pattern that could continue in 2008, Brown said.

U.S. railroads and trucking companies, already struggling with a yearlong freight slump, could continue facing weak demand at least through the first half of 2008, Fitch Ratings said Thursday.

Railroads will fare better than truckers because tighter rail capacity will help bolster rates, Fitch analyst Stephen Brown in Chicago said in a report.

"There's a lot of concern that this could be potentially a prolonged downward period," Brown said in an interview.

Article Source: Chicago Tribune


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This surely won't help in terms of trying to raise freight rates. Many Owner Operators could go under this Winter if this truly does continue.