Transportation sector could weaken next year even if broader economy strengthens, Fitch says

The U.S. transportation sector could weaken next year, even if the broader economy strengthens, with protectionist trade policies, rising interest rates and fuel-price volatility the potential headwinds, according to Fitch Ratings. The credit rating agency’s report comes a day after the Dow Jones Transportation Average DJT, -4.39% suffered its biggest-ever one-day price drop. Some ports with higher commodities exposure with higher exposure to commodities are vulnerable to increased tariffs, Fitch said, while the cost to fund new infrastructure projects would increase as interest rates rise. And with gasoline prices rising steadily over the last several months, vehicle miles traveled (VMT) have declined significantly. "Although gas prices have levelled off somewhat of late, VMT growth may be weighed down next year if gas prices begin increasing again," Fitch’s report said. The Dow transports has lost 8.9% over the past three months and has declined 2.2% year to date. In comparison, the Dow Jones Industrial Average DJIA, -3.10% has slipped 3.7% the past three months but has gained 1.3% this year.

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