United States Freight Transport Report Q2 2014 - New Market Study Published

BMI maintains its positive outlook for the US freight transport sector. Our view for gradual strengthening in the US economy through end 2014 continues to play out, driven by a tightening labour market and sustained growth in the cyclical components of the economy, notably the residential housing sector and business investment in equipment. Data have been particularly strong in recent months, and we acknowledge that risks are weighted to the upside. On the back of this BMI maintains its cautiously positive outlook on the US freight sector.

Our view for a narrowing US current account as a percentage of GDP deficit continues to play out, largely on the back of falling energy prices and higher domestic production. We believe that a falling reliance on energy imports and an uptick in global demand for US goods and services will support a further narrowing in the current account deficit, from our estimate of 2.6% of GDP in 2013 to 2.2% by 2017. We believe export growth will generally outpace import growth over the medium term, and expect broad stability in the financial account. That said, we highlight the risk of stronger-than-expected US private consumption in 2014, which could boost imports more than we expect.

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A steady improvement in consumer confidence during 2013 also reinforces our view that private consumption will accelerate in 2014. As confidence improves, we expect consumers to be relatively more willing to spend on big-ticket items and shift relatively more income away from savings and toward spending, boosting demand for freight transport services.

Key Industry Data

* At the Port of Los Angeles (LA) we forecast a contraction of 3.9% in total tonnage in 2014, to reach 65.5mn tonnes.
* At the East Coast port of New York/New Jersey (NY/NJ), growth is forecast to be 3.1% in 2014, to reach 139.0mn tonnes.
* We predict growth of 3% in air freight volumes, to reach 21.2bn tonnes-km in 2014.
* We predict growth of 3% in rail freight tonnes, to reach 2.01bn tonnes in 2014.

Key Industry Trends

Bakken Oil Boom Boosts Rail Investments

The construction of the South Heart Rail Terminal (SHRT) is a strong strategic move for the companies involved. Without pipelines for some time to come, oil producers have turned to rail networks to transport their wares. In North Dakota in particular, railways account for a substantial portion of oil transported. Moreover, we note that new, more stringent regulations covering rail cars are likely to result in the retrofitting of thousands of tank cars.

O'Hare Airport To Have New Cargo Facility

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