NEW YORK — Results from two major U.S.
railroads next week are likely to attract more scrutiny than
usual as investors look for signs of how deeply U.S. President
Donald Trump’s multi-front trade war is affecting freight
companies and the wider economy.
Among those reporting as the second quarter earnings season
kicks off next week are Union Pacific Corp on Thursday
and Kansas City Southern on Friday, amid worries that
new U.S. import tariffs threatened by the Trump administration
could also herald weakening demand for goods movers, including
truckers, container companies and package carriers.
There is even talk of a “freight recession” and investors
look to the transportation sector as a barometer of U.S.
The S&P 500, which crossed the 3,000 mark for the
first time this week, has seesawed between record highs and
selloffs in recent months on increasing U.S.-China trade
acrimony and concerns about a U.S. economic slowdown.
“If these companies come out with reports that confirm
people’s concerns about tariffs and inventory build-up, that
won’t be good for the market,” said Chuck Carlson, chief
executive officer at Horizon Investment Services in Hammond,
Omaha, Nebraska-based Union Pacific operates a
32,000-route-mile rail network that includes the Los
Angeles/Long Beach complex, a port responsible for most of the
U.S.-China cargo flow.
Tariffs have already affected the company’s bottom line. In
the first quarter, overall freight volume fell, hurt by a 7%
reduction in grain carloads driven by reduced exports to China.
In June, CEO Lance Fritz told Reuters the trade war is “a
significant threat” to Union Pacific’s outlook.
Kansas City Southern is expected to report year-on-year
earnings and revenue growth in the mid-single-digits, according
to Refinitiv data.
The company’s U.S.-Mexico cross-border traffic contributes a
large share of its revenue, and investors will be listening