Fitch: Modest Growth, New Questions Await U.S. Transportation Infrastructure in 2017

The outlook is stable for U.S. transportation infrastructure headed into next year though the sector is not without its uncertainties, part of which stem from the new Presidential administration's plans for infrastructure according to Fitch Ratings in its 2017 outlook report.

Part of what will drive modest growth for transportation infrastructure will be low fuel prices, according to Director Tanya Langman.

“Congestion relief and infrastructure renewal needs will continue to necessitate debt borrowing and investing by large transportation enterprises,” said Langman.

Low gas prices will buoy toll roads in particular, with Fitch projecting moderate traffic growth in 2017. Growth is also in the cards for U.S. airports, with Fitch projecting up to 3% passenger growth next year and major market airports to drive the majority of that growth.

Perhaps the biggest uncertainty facing transportation infrastructure in 2017 revolves around political risks, chief among them uncertainty over President-elect Donald Trump's plans for infrastructure spending and state tolling opposition. A detailed plan for infrastructure spending from the new administration, coupled with concrete legislative proposals, could provide longer-term clarity regarding federal funding.

Some of the aforementioned uncertainties also lie with U.S. ports. Shipping and terminal counterparties are undergoing mergers while shifts in strategic alliances are taking place. The new administration's focus on renegotiating trade agreements may also affect cargo volumes in 2017 and longer term. That said, Fitch has a stable outlook for U.S. ports.

The American Association of Port Authorities will be convening a press conference on Tuesday, December 6, to share its findings with Supply Chain Management Review.

The same holds true for GARVEE bonds with the Fixing America's Surface Transportation (FAST) Act giving the sector a shot in the arm. There is some consideration of transferring transit funding to state jurisdiction. While no representations have been made by the incoming administration, Fitch expects that any material changes to federal funding programs for highways or transit will be designed to not adversely impact GARVEE debt that has already been issued.

Analysts add that “an interesting wrinkle for transportation infrastructure in 2017 will be Mexico.”

“Its close economic relations with the United States, and President-elect Trump administration's foreign policies increase economic uncertainty in Mexico,” said Langman.

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