#reportslower

Standard & Poor's economists have lowered our forecast for global real GDP growth to 3.1% in 2011 vs. 4.2% growth last year. We expect U.S. GDP growth to be more sluggish--only 1.6% (a little more than half that of last year)--and Canada to be only modestly better at 2.3%. Our economists also see a 40% chance of a double-dip recession in the U.S. This translates into varying degrees of risk for North American transportation companies."Well-diversified freight transportation companies, such as railroads and package express companies, appear best positioned, in our view, based on the precedent of their relatively good performance in the 2008-2009 recession," said Standard & Poor's credit analyst Phil Baggaley. "Highly competitive sectors burdened with excess capacity, such as oil tankers and some parts of the trucking industry, are already in distress or are at risk of becoming so if growth drops off significantly."Lower crude oil prices, caused by a slowing economy, provide a partial offsetting positive for many companies, though fuel costs nonetheless remain high by historical standards.Another potential challenge for transportation companies is the risk of more severe disruptions in financial markets, potentially triggered by sovereign debt problems in Europe. Most companies are capital intensive and rely on debt funding from banks and the capital markets. Here again, the risk varies by sector and from company to company.