Fitch Ratings Updates Coronavirus Supply Chain Recovery Assumptions

The ongoing effects of the coronavirus pandemic on U.S. airports, toll roads and ports are prompting Fitch Ratings to refine its recovery assumptions, which the rating agency has detailed in a new report.

Six months after last publishing its assumptions, Fitch is implementing more severe downside parameters to reflect transportation segments that are on very different trajectories.

“The slowest recovery lies ahead for airports with 2019 volume levels not likely to return until at least 2024,” said Director Jeffrey Lack. Fitch’s revised coronavirus rating case sees an improvement to 55% of 2019 levels by 1Q’21 and 75% by 4Q’21, such that enplanements total 65% of 2019 for calendar year 2021. In the rating case, an effective vaccine/treatment is not widely available until late 2021.

Comparatively, “toll roads have already recovered more than half of peak losses and are well-poised to rebound by 2022 as the pandemic wanes,” said Senior Director Scott Monroe. Fitch’s assumptions for toll road recovery have not changed since the spring, though new downside cases reflect the possibility of a second set of strict lockdowns.

Fitch projects passenger vehicles will recover to -20% as compared to 2019 levels in 4Q20 and to -7% in 2021 with full traffic recovery likely by 2022.

This will have implications for the air cargo industry, says Chuck Clowdis, Managing Director at Trans-Logistics Group, Inc., a consultancy.

“The coming year brings even more uncertainties than usual for the air cargo sector,” he adds. “Consumer spending certainly will be a driver of air cargo volumes and higher rates.”

The recovery for ports is more uneven, according to Senior Director Emma Griffith, with coronavirus scenarios considering cargo and cruise activity separately. “Cargo ports should return to 2019 levels by 2022 while cruise operations may not fully recover until 2024 and possible even later,” said Griffith.

‘Fitch Updates its U.S. Transportation Sector Coronavirus Assumptions’ is available at ‘www.fitchratings.com’.

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