Boston, MA -- (SBWIRE) -- 08/22/2012 -- The below-par but sustained US recovery continues, in line with our view that the economy would avoid a double-dip recession, but experience slow and erratic growth. For 2012 we maintain our forecast of 2.0% growth, followed by 2.4% in 2013. On the back of this outlook we remain concerned about the US' air freight sector, which has been struggling with falling volumes and rising fuel prices. We expect road and rail freight to fare somewhat better, but we caution that there is downside risk here too, from the possibility of a drop-off in demand from China - the US' biggest export market.

We believe that US private consumption growth will remain subdued. We are forecasting real private consumption growth of 2.1% in 2012 and 2.4% in 2013, from 2.2% in 2011. Private consumption has been responsible for most of real GDP growth since the middle of 2011 but we expect the consumer's contribution to fade as 2012 progresses, putting downside pressure on demand for imports. Meanwhile, government deficit reduction will weigh on economic activity, while the European crisis poses downside risks to the export sector.

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Key Industry Data

- At the Port of Los Angeles (LA) we forecast 4.7% year-on-year (y-o-y) growth in total tonnage in 2012, to reach 67mn tonnes.
- At the east coast port of New York/New Jersey (NY/NJ), growth is forecast to be 3.88% y-o-y in 2012, to reach 145mn tonnes.
- We predict y-o-y growth of 3.6% in air freight volumes, to reach 53.9bn tonnes-km in 2012.
- We predict y-o-y growth of 4.1% in rail freight tonnes-km, with annual average growth of 5% during our forecast period.

Key Industry Trends

EU-US Agreement Changes Little For Air Freight

BMI asserts that - considering the beleaguered state of the US and European air freight sectors, with cargo volumes declining - an agreement to simplify air cargo security and by extension cut costs is a positive development. We do, however, caution that with the threat of terrorism ever-present and the airline industry traditionally the target of terrorist plans to attack the US, any new threat would likely lead to an increase in security measures which could fall outside the current agreement's remit.

KCS To Move More Intermodal

BMI believes US railroads may face a dip in volumes in 2012 as coal shipments fall amid concerns about domestic and external demand for the fuel. This is bad news for the sector, as coal makes up 40-50% of its volumes. On the upside, we maintain our view that there is growing potential for railroads to carry oil, chemicals and autos shipments, which should boost volumes. Our view on Kansas City Southern (KCS) remains particularly positive as the company seeks to boost intermodal volumes on the Mexico-US route.

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