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Rail News: Mechanical

EPA: After Q1, rail-car delivery projection remains at 58,000 units for 2012


In the first quarter, rail-car orders totaled 12,500 and assemblies totaled 16,800, resulting in a modest backlog decline of 4,400 units, according to the latest rail-car market report issued by Economic Planning Associates Inc. (EPA).

At current production rates, car builders still have 3.6 quarters of deliveries in their backlogs, the report states.

Tank cars continued to drive demand. Despite an acceleration in assemblies, first-quarter orders of 6,479 tank cars brought backlogs as of March 31 to 32,843 units, more than nine quarters’ worth at current production rates.

“While orders for small-cube covered hoppers moderated, first-quarter assemblies of 5,134 cars and backlogs of 9,131 cars ensures a healthy level of deliveries this year while continued growth in oil and gas exploration should keep deliveries at a high level next year,” EPA officials said in the report.

Meanwhile, box-car demand has been rising as TTX Co. upgrades its aged 50- and 60-foot general service cars, and a three year rise in manufacturing activities has been prompting strong growth in mill gondolas and steel coil cars, which should translate into healthy levels of deliveries this year and next, the report states.

Conversely, first-quarter orders for GT gondolas and hoppers were extremely weak because of reduced coal consumption by utilities, and demand for grain service cars was soft due to fewer grain haulings.

“Among the various car types, we believe that coal cars have under-performed in recent years but should pick up in the future as coal export markets expand and replacement pressures intensify,” the report states. “Exports continue to be a dominant factor in the coal environment. We continue to anticipate strong growth in both metallurgical and steam coal exports. In addition to Asia, exports to Europe will continue to advance.”

Based on first-quarter assemblies and current backlogs, EPA is not changing its initial estimate of 58,000 rail-car deliveries in 2012.

“Next year, a slowing in the recent frenetic production pace of small-cube covered hoppers will moderate the growth in deliveries to 59,000 units, before there is a modest easing to 57,500 deliveries in 2014,” EPA officials said.

Longer term, stronger economic activities will support certain rail-car assemblies while an improvement in the financial environment, high gasoline prices and strong government backing will stimulate greater demand for ethanol and DDG cars, the report states. Replacement pressures, technological advances and legislative measures also will play a role in promoting the demand for a variety of cars.

After 2013, car demand likely will remain at high annual levels, gradually reaching 60,300 units in 2017, EPA projects.

Contact Progressive Railroading editorial staff.

More News from 5/2/2012