Progressive Railroading Daily News

NEWS LISTINGSSITE HOME

Now available on your:
BlackBerryiPhone

Thursday, October 31, 2013    

Despite strong tank-car demand, car orders weakened in 3Q, EPA says


Rail-car orders eased again in the third quarter after a less-than-stellar second quarter and extremely robust first quarter, according to Economic Planning Associates Inc.'s (EPA) latest "Rail Car Overview" report.

Despite a "marked acceleration" in the assemblies of tank cars, small-cube covered hoppers and Class F cars (primarily auto racks), the car backlog as of Sept. 30 remained at 73,800 units, "a relatively high level from an historical perspective," EPA officials said in the report.

"Of equal importance, demand continues to broaden among selected car types. As a result, tank cars, which comprised 80.6 percent of total orders in the first quarter and 46.8 percent of total orders in the second quarter, only accounted for 40.4 percent of the orders in the third quarter," they said.

Tank-car backlogs represent almost eight quarters of production at current rates, and EPA officials expect further strong growth in crude-oil demand from the Bakken Formation, Permian Basin and Eagle Ford Shale.

"The growth in oil output from North Dakota and Montana has been extremely strong and we expect further rapid expansion in crude-oil production and rail movements of oil during the forecast horizon," they said.

Car market concerns through the year's first three quarters center on a relative lack of interest in coal cars, intermodal equipment and hi-cube covered hoppers, EPA officials said. Coal car demand, which continues to be plagued by stringent U.S. Environmental Protection Agency standards, will experience a weak 2013 and 2014 before showing signs of a modest improvement in 2015, they said. EPA forecasts 1,100 coal car deliveries in 2013 and 2,500 in 2014 versus 6,492 in 2012.

Going forward, the firm expects some stabilizing demand for box cars and grain cars, along with a pick up in orders for small-cube covered hoppers and mill gondolas, and continued rapid expansion in tank-car demand.

Based on assemblies through 2013's first nine months and backlogs as of Sept. 30, EPA anticipates deliveries to total 50,400 units by year's end, a 14.5 percent decline compared with 2012's total. Next year, deliveries are projected to rebound to 57,800 units as tank-car demand continues to expand at a rapid clip, mid-sized and small-cube covered hopper demand advances, and modest improvements are registered for intermodal platform and coal car orders.

"Longer term, we are hopeful that stronger economic activities will provide support for certain rail-car assemblies while an improvement in the financial environment, high gasoline prices and strong government backing stimulate greater demand for ethanol and DDG cars," EPA officials said.

Beginning in 2015, annual rail-car assemblies will gradually increase from 60,000 units, reaching 64,000 units in 2018, they said.

More news items from 10/31/2013
Rail Industry Online Only Features
(past 30 days)


Pandrol, click here.
Impressions

Unitrac, click here.
Impressions

CIT Rail, learn more.
Impressions

InnoTrans 2014
Impressions


Get more information