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Rail News: Mechanical

EPA forecast: Rail-car assemblies to reach 37,900 in '11, 48,300 in '12


Despite an “evaporation” of 900 cars from rail-car backlogs and a 38.7 percent hike in car assemblies in the second quarter, the total industry backlog rose from 51,900 units on March 31 to 57,300 units on June 30, according to Economic Planning Associates Inc.’s (EPA) quarterly “Rail Car Overview” report.

The mid-year backlog level is two-and-one-half times higher than the beginning year level and represents 5.4 quarters of deliveries at current production rates, the report states.

“And car builders can expect further orders as we proceed through this year and into 2012,” EPA officials wrote in the report. “Already in the third quarter, a major leasing company has ordered 5,000 tank cars and hoppers from a number of builders. At the same time, CSX has reported that it increased capital spending $200 million to accommodate the growing coal export market by investing in facilities, locomotives and additional freight cars.”

Although the slowing economy might dampen demand for some car types, EPA officials “remain optimistic” about further gains in car orders and deliveries, they said. Export coal shipments are increasing at a rapid clip, helping to propel coal-car orders. Foreign demand will intensify as steel producers in Asia and South American continue to drive demand for metallurgical coal, while Japan and European countries seek to transition from nuclear to coal-fired power generation, the report states.

The covered hopper market remains vibrant, as well, EPA officials wrote. Stronger production of ethanol from corn and a rebound in chemicals and plastics activities are stimulating demand for hi-cube equipment, while higher export volumes and greater domestic grain consumption are bolstering demand for mid-sized cars.

Meanwhile, interest in mill gons and steel coil cars rebounded in the second quarter. In addition, light vehicle sales and production continued to improve, setting the stage for a rebound in demand for auto parts box cars and autorack cars, especially to replace the “extremely aged” box-car fleet, the report states.

Based on current backlogs and anticipated gains for various cars, EPA officials project assemblies of 37,900 cars this year followed by 48,300 cars next year.

“Longer term, far 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,” the report states. “Replacement pressures and technological advances, as well as legislative measures, will also play a role in promoting the demand for a variety of rail cars.”

An “acceleration” in rail-car demand will drive up deliveries to 51,500 units in 2013 and continue to propel production the next three years until deliveries reach 62,500 units in 2016, EPA officials wrote.

Contact Progressive Railroading editorial staff.

More News from 8/1/2011