Boston, MA -- (SBWIRE) -- 06/05/2013 -- BMI maintains its cautiously positive outlook on the US freight sector. In light of the fiscal agreement reached at the beginning of 2013, we have revised up our US real GDP growth forecast to 2.3% from 2.1% for the year. However, our general outlook for a slow and erratic growth path for the US economy remains in place. The biggest near-term economic issue - the tax hikes that were set to kick in on January 1 2013 as part of the fiscal cliff - has been resolved, though there will continue to be uncertainty ahead of the debt ceiling negotiations and the sequester spending cuts due to come into effect in March.

US freight volumes face headwinds in the form of sluggish private consumption recovery and slow demand for exports. US private consumption will continue to recover very slowly as a combination of still-high unemployment, ongoing deleveraging, low wage growth and a dependency on government transfers continue to weigh on spending growth. The US export sector is likely to face increasing headwinds from abroad, centred around reduced European demand amid a eurozone recession and potential for dollar strength. Just under one-quarter of US exports go to the European Union, and the European crisis is likely to impact upon non-eurozone demand for US goods and services.

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Key Industry Data

- At the Port of Los Angeles (LA) we forecast a 4.2% growth in total tonnage in 2013, to reach 69.3mn tonnes.
- At the East Coast port of New York/New Jersey (NY/NJ), growth is forecast to be 2.1% in 2013, to reach 143mn tonnes.
- We predict growth of 3.8% in air freight volumes, to reach 13.8bn tonnes-km in 2013.
- We predict growth of 5.8% in rail freight tonnes, to reach 2.17bn tonnes in 2013, with annual average growth of 6.0% during our forecast period.

Key Industry Trends

Shale Crude Opportunities For Rail Operators

BMI believes that there is huge potential for rail operators in North America to benefit from the explosion in domestic shale crude oil production. The growth of the industry has accelerated faster than pipelines have been built to transport the goods, meaning that rail is being increasingly used to transport crude to refineries. The nascent industry will support the rail companies as the transport of coal for domestic use peters out, and offers upside risk to our rail freight forecasts.

Delta's Trainer Strategy To Pay Off

The Trainer refinery, acquired in May 2012 by Delta Air Lines, will most likely record a loss for the last quarter of 2012. Nonetheless, this appears to have been triggered by exceptional circumstances and we do not believe it reflects the value of Delta's investment. On the contrary, we believe that a reduction in feedstock fuel throughout the coming years and an improvement in the company's bargaining position will help it lower its operating costs.

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