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The second quarter earnings season of U.S. companies will kick off in the coming week. Railway freight companies Union Pacific Corp. (UNP.N) and Kansas City Southern (KSU.N) will announce their earnings on Thursday and Friday, respectively. At this time, investors are worried that the new import tariffs threatened by Trump's government may signal a weakening demand for freight forwarders such as trucks, container companies and package carriers.
Some are even talking about a "freight recession," and investors see the transport sector as a barometer of the quality of the U.S. economy.
The S& P 500 index. SPX rose above the 3,000 mark for the first time in the past week. It has been wavering in recent months, hitting record highs at times, and falling under the influence of intensified trade frictions between China and the United States and fears of a slowdown in the U.S. economy.
"If these companies'earnings confirm concerns about tariffs and inventory increases, it will be bad for the market," said Chuck Carlson, executive director of Horizon Investment Services in Hammond, Indiana.
The United Pacific, headquartered in Omaha, Nebraska, operates a 32,000-mile rail network, including the San Francisco/Long Beach Port Complex, which carries most of the freight between China and the United States.
Tariffs have affected the company's profits. In the first quarter, overall freight volume fell, affected by a 7% drop in grain volume caused by the decline in US exports to China.
The company's chief executive told Reuters in June that the trade war posed a "major threat" to the prospects of the United Pacific.
Refinitiv data show that Kansas City Southern is expected to announce earnings and revenue growth of about 5% over the same period last year.
Much of the company's revenue comes from cross-border transportation between the United States and Mexico. Investors will closely monitor the company's estimates and look for information about President Trump's threat to impose taxes on Mexican goods at the end of May.


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