Moody's: North American railroads outlook stable

Moody's Investors Service said that although the North American freight railroad sector has been negatively affected by the current economic downturn, it has fared relatively well, especially when compared to other modes of transportation such as marine, air freight and trucking.

The agency expects that volumes will continue to remain weak through 2009 and possibly into 2010 but that volume declines will lessen over the next few quarters.

"Railroads have benefited from a strong pricing environment, which we expect will continue to be robust enough to offset much of the volume weakness in the near term," Moody's vice president-senior credit officer David Berge said in an agency statement.

Moody's said the lower volume decline should allow the railroads to experience continued pricing growth - albeit moderated from prior years' levels - which, in turn, should result in more stable revenues and margins.

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