Fitch Ratings has neutral outlook for freight and logistics sector for 2025

Fitch Ratings has issued a neutral outlook for the freight transportation and logistics (T&L) sector in Canada and the U.S., anticipating a gradual recovery starting in 2025.

The sector, which encompasses freight operators such as rail, trucking, freight brokerage and logistics services, is poised to benefit from an improving freight cycle following a challenging period between mid-2022 and mid-2024. Fitch Ratings, a U.S. credit rating agency, says operating conditions are beginning to stabilize, driven by consistent economic growth, including positive trends in retail shipments, modest growth in industrial end markets and better capacity balance in trucking markets. Fitch predicts pricing growth and steady cost structures will support improving margins for industry players.

“The Rating Outlooks across the sector are largely stable, reflecting its inherent cyclicality and our through-the-cycle ratings approach,” Fitch Ratings stated in a release.

Key factors differentiating investment-grade companies from high-yield issuers include competitive positioning, financial flexibility and leverage profiles. Fitch noted that many high-yield companies are likely to focus on integrating large acquisitions or asset purchases in 2025.

The report also highlights potential risks to the sector’s outlook, including:

• An aggressive tariff policy that could disrupt macroeconomic conditions;
• A resurgence of high inflation; and
• A failure to see a positive turnaround in truckload rates in 2025.

Despite these risks, the ongoing trends of nearshoring and onshoring production capacity across North America could boost domestic freight flows over the medium term, providing additional opportunities for the sector.

Fitch Ratings’ outlook underscores the importance of strategic positioning and adaptability for freight and logistics operators as they navigate a complex and evolving market.