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<< Rail News Home: Mechanical

7/29/2008    Freight-Car Market

Rail News: Mechanical

Strong second quarter means more rail-car deliveries in '08 than previously projected, EPA says

Despite a "fragile" economy and higher equipment prices, demand for rail cars "held up surprisingly well" in the second quarter, according to Economic Planning Associates Inc.'s (EPA) quarterly rail-car outlook report.

Driven by increased demand for covered hopper, coal and tank cars, orders in the quarter totaled 12,142 units, up 15.8 percent compared with first-quarter orders.

"All of the second-quarter orders were for conventional cars — there were no intermodal platforms in the mix," EPA officials said in the report.  "Equally impressive was the fact that there was only a minimal evaporation of orders from the existing backlogs during the quarter."

Only 990 cars disappeared from backlogs, or 1.5 percent of the total at the beginning of the quarter. The mid-year backlog of 61,600 units represents about 4.2 quarters of deliveries.

However, EPA officials "remain cautious" about the outlook for car demand during the next two to four quarters, primarily because current economic data indicates a "rapid advance" in car prices in recent months.

"With higher [interest] rates, we expect both the housing and private construction sectors to remain depressed through the end of this year," they said in the report. "At the same time, consumer demand is being impacted by declining home values and rising gasoline prices, which have 'slammed' auto sales in recent months."

Based on first-half assemblies and existing backlogs, EPA is increasing its full-year estimate of car deliveries to 54,000 units.

"Next year, we are anticipating a third year of easing, as deliveries are projected at 47,0000 cars," EPA officials said, adding that their 2009 estimate contains only a minimal amount of intermodal platforms.

As replacement pressures mount for box and multi-level flat cars, and mid-sized and small-cube covered hoppers, and demand increases for center beams, high-cube covered hoppers, intermodal equipment, and tank and coal cars, deliveries will rebound to 50,000 units in 2010, 53,300 units in 2011, 56,800 units in 2012 and 60,000 units in 2013.

Contact Progressive Railroading editorial staff.