(Editor's Note: S&P Global Ratings believes there is a high degree of unpredictability around policy implementation by the U.S. administration and possible responses--specifically with regard to tariffs--and the potential effect on economies, supply chains, and credit conditions around the world. As a result, our baseline forecasts carry a significant amount of uncertainty. As situations evolve, we will gauge the macro and credit materiality of potential and actual policy shifts and reassess our guidance accordingly (see our research here: spglobal.com/ratings).)
Key Takeaways
- An evolving macroeconomic and trade environment is driving modifications to our Jan. 9, 2025 activity measures across the U.S. transportation infrastructure asset classes, with the largest impact on ports, reflecting the rippling effects of significantly higher tariffs. There is no change to our stable sector outlooks at this time.
- We believe trade disputes between the U.S. and its partners, resulting in a significant increase in the overall effective U.S. tariff rate, will erode port container volumes in the near term. We forecast U.S. port volumes, as measured by twenty-foot equivalent units (TEUs), will decrease about 4% in calendar 2025, revised from a 0.7% decline estimated in January, with the overall calendar-year impact somewhat mitigated by the surge in volume before the tariff announcements on April 2.
- Most U.S. large container ports have financial headroom to withstand trade volatility but a prolonged disruption or more gradual volume declines would pressure credit quality if not addressed by management.
- We expect weaker, but still positive, U.S. economic conditions will result in slower and more tempered growth for the airport sector, with limited effects on ridership recovery for transit operators and benign impacts on the toll road sector, aided by falling fuel prices.
S&P Global Ratings expects activity in the U.S. transportation infrastructure sector (aviation passengers, port container volumes, vehicle miles traveled, and transit ridership) will continue to normalize in 2025 due to the forecast for weaker, but still positive, U.S. economic conditions, except for the maritime or port sector.
Due to changing economic and global trade conditions, we have revised lower our 2025 activity estimates compared with those published in January 2025. More specifically, we expect average annual growth from 2025-2027 of about 2% for enplanements, 4% for transit ridership, and 2% for vehicular traffic. In contrast, we believe ongoing trade disputes will adversely affect port container volumes, which we forecast will decrease about 4% in 2025 and 2% in 2026, followed by 3% growth in 2027. For more information, see "2025 U.S. Transportation Infrastructure Activity Estimates: Generally Steady Demand And Growth," published Jan. 9, 2025, on RatingsDirect.
Our estimates are based on industry trends, discussions with management teams, and S&P Global Economics' view for the next year. Higher volumes largely outweighed rising costs in 2024, even as transportation infrastructure enterprises (TIE) passed on their higher expenses to tenants and users via increased fees, charges, fares, tariffs, and tolls.
Favorable revenue performance due to management's willingness and ability to raise rates, along with demand recovery, boosted financial performance, resulting in improved credit quality across the sector. However, we will continue to monitor port container volumes and, to the extent declines are sustained, any erosion in credit quality. We note U.S. port operators generally benefit from solid financial margins given they are inherently exposed to volatility due to normal business and economic cycles, shifting trade patterns and supply chains, drastic fluctuations in commodity prices, and changes in bilateral and multilateral trade policies.
Maritime Activity Weakens, Aviation Passenger Growth Slows
Chart 1 shows composite activity levels from 2019 through 2024 and our updated estimates for 2025 through 2027, compared with 2019 as a pre-pandemic benchmark.
Chart 1
We used data from the Bureau of Transportation Statistics and S&P Global Market Intelligence to develop our estimates for 2025-2027. We derived our estimated annual growth rates by comparing recent actual performance data across four activity measures (enplanements, unlinked transit trips, port container activity measured in TEUs, and vehicle miles traveled) and analyzing changes in year-over-year growth since 2010.
- Enplanements: We expect slower enplanement growth in 2025 and 2026, supported by the segment of the U.S. population that has a high propensity to travel by plane for business or leisure purposes. Moreover, we estimate enplanement growth of 1.5% in 2025, with system-wide traffic now at 106% of 2019 levels. The Transportation Security Administration counts for May 2025 were 106.4% of 2019 levels, in line with our estimate. Actual enplanements will vary considerably by airport, with some airports growing faster while others could experience decreases. Slowing economic conditions soften our growth forecast from domestic leisure and business travel; international travel, particularly with Canada, Mexico, and other notable trading partners, could soften in the near term, although domestic enplanement growth could offset this. Another key headwind facing the airport sector is the ongoing delay in new-aircraft deliveries, which reduces available seats and airport throughput. In the interim, airlines have attempted to counteract these constraints by replacing smaller planes with larger ones. We're also monitoring labor shortages that could force airlines to cut less-profitable routes.
- Vehicular traffic: Generally stable vehicular traffic trends informed our updated 2025 estimates, which assume that both auto travel and transportation of goods by commercial vehicles will remain relatively strong, benefiting toll roads. With less demand for employees to be in the office five days a week, some workers have moved out of major cities to more affordable areas that might not have convenient public transportation options. This change could, in turn, spur further reliance on cars and toll roads for access to urban centers. Furthermore, we expect that cheaper fuel prices, combined with slower forecast economic growth, might correspond with more local travel by vehicle instead of domestic air travel as consumers curb more expensive air travel to visit closer attractions.
- Containers: Port activity generally moves in line with the broader U.S. economy; however, we expect lingering trade disputes, resulting in significant increases in tariffs, will erode port container volumes in the near term. Consequently, we forecast U.S. port container volumes will decrease by about 4% in calendar 2025, with the overall decline somewhat mitigated by the surge in volume before the tariff announcements on April 2, followed by about a 2% decrease in 2026, and growth resuming in 2027 at almost 3%. We will follow developments, although the changing situation has made forecasts uncertain with a short shelf life.
- Mass transit ridership: Mass transit remains the outlier among TIE issuers, with 2024 activity at only about 77% of 2019 levels. Given its more significantly depressed base, in our opinion mass transit has capacity to grow at a faster rate than other modes of transportation. Our activity estimates now show ridership recovering to 82% of 2019 levels in 2025, 86% in 2026, and 90% in 2027. National ridership, according to the American Public Transportation Association, has been fluctuating around 80%-85% on recent months. Given secular changes in the usage patterns of mass transit passengers, we believe it's possible that the mass transit sector could be approaching a new baseline. In our view, additional recovery will be fueled by demographic shifts over the longer term or actions taken by local policymakers, such as imposing congestion pricing to encourage increased usage of mass transit. Our view of the mass transit sector is also heavily influenced by lasting changes to the workplace landscape following the rise of remote work. Our updated activity estimates show public transit ridership potentially plateauing at about 90% of pre-pandemic levels by 2027 (absent outside influences that could stimulate transit ridership, such as employers limiting the ability of employees to work from home).
Our U.S. Economic Forecast Assumes More Tepid Growth Because Of Policy And Tariff Uncertainty
The U.S. economy is still forecast to expand in 2025, but with growth softening due to shifting policies and unresolved tariff disputes. S&P Global Ratings forecasts that real GDP growth will cool to 1.9% in 2025 and 2026, down from 2.9% in 2023 and 2.8% in 2024, which informs our view of more tempered demand growth for certain sectors. We forecast that consumer spending will decelerate to 2.2% and 1.9% in 2025 and 2026, respectively, down from 2.8% in 2024. Chart 2 shows the forecast of various key economic indicators we considered in arriving at our activity estimates.
Chart 2
S&P Global Commodity Insights expect oil prices to fall into the high $50s per barrel area for West Texas Intermediate in the second half of 2025 and gasoline prices to remain relatively level. Furthermore, S&P Global Commodity Insights believes the federal pro-energy policies will only serve to continue record domestic oil and gas production in the U.S. According to the forecast, high domestic energy production is correlated with lower fuel prices, underpinning our expectation for continued, albeit slow, growth in the toll road and airport sectors.
A continued rise in the cost of living could influence some city residents to opt for mass transit in place of other forms of transportation, such as ride-hailing services and car ownership, underpinning our forecast for further recovery in mass transit ridership.
Higher tariffs and policy uncertainty were initially forecast to weaken growth, although recent U.S.-China tariff de-escalation provides some temporary relief. The U.S. and China sharply reduced bilateral tariffs on May 12, and enacted a 90-day pause to help facilitate a broad-based agreement. Market reaction was positive, but policy uncertainty remains high.
We caution that more progress is needed before trade policy normalizes. The latest U.S.-China tariff moves are positive for growth and, assuming they hold, raise our GDP growth forecasts closer to our previous forecast as of March 27, 2025. Nevertheless, we expect policy uncertainty and generally unresolved tariff disputes will continue to weigh negatively on port volumes in 2025 and 2026, with port TEU growth resuming in 2027.
Related Research
- Global Credit Conditions Special Update: U.S.-China Tariff De-Escalation Brings Some Temporary Relief, May 15, 2025
- Economic Outlook U.S. Q2 2025: Losing Steam Amid Shifting Policies, March 25, 2025
- U.S. Not-For-Profit Transportation Infrastructure 2025 Outlook: Tariffs May Rock The Boat As The Sector Stays On An Even Keel, Jan. 9, 2025
- U.S. Transportation Infrastructure Airport Update: Air Travel Rides The Jetstream, For Now, June 18, 2024
This report does not constitute a rating action.
| Primary Credit Analyst: | Scott Shad, Englewood (1) 303-721-4941; scott.shad@spglobal.com |
| Secondary Contacts: | Kurt E Forsgren, Boston + 1 (617) 530 8308; kurt.forsgren@spglobal.com |
| Quinn Rees, New York +1 (212) 438 2526; quinn.rees@spglobal.com | |
| Research Contributor: | Ritesh Bagmar, CRISIL Global Analytical Center, an S&P affiliate, Pune |
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