In a recent [ABF Journal / Monitor] interview, Editor-in-Chief Rita Garwood sat down with Andy Blumenstock, Managing Director at Hilco Valuation Services, to discuss how the 2025 tariffs are disrupting the landscape for large-ticket transportation assets. Blumenstock shared insights from aviation, rail and maritime markets, explaining how investors, lenders and lessors are adapting, what sectors are seeing the most pressure, and where strategic opportunities may be emerging.
Rita Garwood: Andy, for those who may not know you, can you tell us a little bit about your role at Hilco?
Andy Blumenstock: Sure. I’m a managing director in Hilco Global’s Enterprise Valuation group. We help investors, lenders, and corporate clients — including lessors — understand the real-world value of their businesses and assets. My focus is on capital-intensive transportation sectors like aviation, rail, and maritime. Hilco is a global financial services and investment firm with deep expertise in valuation, monetization, and strategic advisory, which gives us a unique perspective on how policy shifts — like the 2025 tariffs — ripple through transportation markets.
Garwood: Let’s start with the big picture. How have the 2025 tariffs disrupted the transportation asset landscape?
Blumenstock: They’ve shaken things up quickly and deeply — particularly in aircraft, railcars and vessels. Longstanding trade flows have been disrupted almost overnight, hitting financing models, valuation models, and supply chains. In aviation, for example, a single aircraft might cross dozens of borders during assembly, so tariffs compound costs at multiple points. What was once a stable market has become more dynamic — and volatile.
Garwood: Which sector has been hit the hardest?
Blumenstock: Aviation stands out because of ballooning production costs, tight supply and extended delivery timelines. But maritime is also taking a hit from disrupted shipping routes and reduced trade volumes. Both are seeing valuation and lending pressures.
Garwood: You’ve mentioned in a recent article you authored, a $5 billion cost impact in aviation from tariffs. How are market participants adapting?
Blumenstock: Lessors, lenders and investors are adjusting capital deployment strategies. There’s a stronger focus on midlife aircraft, where yields are better and delivery delays are less of an issue, and increased interest in sale-leaseback transactions to stay active without taking on new-build cost pressures. Structured finance tools like EETCs are also being repriced to reflect the added risk.
Garwood: Do you see the midlife aircraft and sale-leaseback trends as short-term or longer-term plays?
Blumenstock: Midlife aircraft were already trending up due to OEM production struggles. Tariffs have reinforced that move, so I’d call it a medium-term trend. Eventually, today’s midlife aircraft will age out, and valuations will shift again. Sale-leasebacks may be more sensitive to interest rates and broader demand growth, so their longevity is harder to predict.
Garwood: How are lease structures changing in aviation?
Blumenstock: I’m seeing lessors explore more dynamic maintenance reserve programs, which may be tied to inflation indices or input costs like steel and aluminum. I’ve even heard conversations about adding force majeure clauses linked to trade disruptions or floating-rate mechanisms to share volatility. It’s all about adapting terms to the new reality.
Garwood: Rail has its own challenges. How are tariffs impacting that market?
Blumenstock: Steel costs are rising, customer confidence is falling and procurement cycles are lengthening. Lenders are more cautious about expanding fleets and are gravitating toward stronger credits, sometimes restructuring weaker leases. Compressed lease spreads are another issue — commodity price shifts can instantly change demand for certain car types, so investors are reassessing commodity exposure and flexibility.
Garwood: And maritime?
Blumenstock: Port activity is down — Los Angeles imports dropped 9% year-over-year in May — and that’s pressuring day rates, especially on Asia–U.S. lanes. Lenders are pulling back from tariff-sensitive routes, and there’s renewed interest in Jones Act vessels, which operate only in domestic U.S. trade and are insulated from international tariff risks. There’s also emerging focus on intra-Asia routes and LNG carriers, both less exposed to U.S.–China friction.
Garwood: You’ve emphasized geographic and asset diversification. What does that look like in practice?
Blumenstock: Reduce concentration — whether that’s OEM dependence in aviation, commodity type in rail or trade lane in maritime. Lenders are favoring borrowers with diversified revenue streams and international reach. It’s about stress-testing for geopolitical and policy shocks.
Garwood: Amid all these challenges, where are you seeing opportunities?
Blumenstock: Pricing dislocations in midlife aircraft and container vessels are attractive. Sale-leasebacks, secondary EETC trades and off-cycle maritime assets are offering yields we haven’t seen in a while. The key is to underwrite complexity and move quickly when opportunities arise.
Garwood: What’s the biggest wildcard over the next six to 12 months?
Blumenstock: Without a doubt its geopolitics. A flare-up — or resolution — of trade tensions could dramatically shift values. After finally settling into a post-COVID global supply chain world, we’ll once again have to see how things recalibrate and how that impacts valuation and lease-pricing.
Garwood: Any final thoughts?
Blumenstock: It’s a dynamic moment. The old playbook won’t cut it. Those who diversify, hedge smartly and act decisively will be best positioned to win in this more global, more complex environment.
