(The following report appeared at Forbes.com on October 23.)
BOSTON, Mass. — Moodys Investors Service Monday said the ratings outlook for North American railroads is stable, as a weakening economic outlook, more aggressive financial policies and the need for significant capital spending offset impressive operational performances.
‘Demand for railroad capacity is at an inflection point as the U.S. economic outlook weakens, and it remains to be seen how well pricing will hold up in a more challenging economic environment,’ said Moody’s senior vice president Robert Jankowitz. He believes shippers are more likely to begin pressuring railroads on price and seek service improvements, which will likely lead to more capital spending by the railroad operators.
Moodys expects the railroad industry to post a more-than 3% decline in carload volume in 2007, with conditions deteriorating into 2008.
Among shares of some North America-based railroad companies, Genesee & Wyoming Inc. rose 2.5% to $29.01, Union Pacific Corp. was up 2.2% at $124.79, Norfolk Southern Corp. was 0.6% better at $52.23, Canadian National Railway Co. fell 1.3% to $52.17 and Burlington Northern Santa Fe Corp. shares added 0.1% to $82.55.