Fitch Ratings on Total Transportation Corp (NYSE:TTC)

August 9, 2023

Total Transportation Corp operates as a bus and ground service provider. The Company offers a variety of services including general and special education student transportation, paratransit, and charter services in New York City, Upstate New York, and Philadelphia. Total Transportation also provides ADA and corporate shuttles. The Company also offers freight transport, warehouse management, and rigging services. Total Transportation manages the complex supply chain processes required for moving all types of life science shipments both domestically and internationally.

During World War I, the American Expeditionary Forces (AEF) emphasized the need for a single transportation manager and a separate Motor Transport Corps was established to manage trucks on 15 August 1918. The MTC subsequently conducted Transcontinental Motor Convoys in 1919 and 1920.

Labor Cost and Availability: Fitch believes the 'BB-' rating is limited by FSFT's high exposure to labor costs, which account for 2/3 of operating expenses. The ratings also incorporate the impact of driver shortages and wage inflation from a challenging employment environment. Fitch expects these factors to continue to contribute to a strained margin profile for the company.

The Company's diversified business mix and strong contracted customer base support the ratings. Additionally, the Company benefits from a number one market position in NYC student transportation and its robust cash flow from CERTS grants. These positive factors are partially offset by a thin margin profile, seasonality in First Transit and a challenging labor market. The acquisition of TTC is credit neutral for FSFT and enhances its market position in NYC.


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