All signs point to 66,500 rail-car deliveries by year's end, EPA says

A soft economy, rising interest rates, declining rail traffic and railroads’ mixed financial performances have led to fewer freight-car orders in the first half, according to Economic Planning Associates Inc.’s (EPA) quarterly car market report.

Orders totaled 11,200 units in the first quarter and 11,600 units in the second quarter compared with the 2005 quarterly average of 20,200 units and 2006 quarterly average of 22,900 units. The main culprit: continuing woes in the housing market, which decreased railroads’ first-half lumber traffic by 22.1 percent and primary forest products traffic by 14.1 percent compared with last year.

“On the brighter side, second-quarter orders reflected a more diversified customer base as non-ethanol-related equipment was added to car builders’ books,” EPA’s report states. “While ethanol demand still drove high levels of tank-car orders, orders for DDG cars were minimal. [And] we are heartened by the second quarter pick up in demand for coal cars and intermodal equipment, while even the previously dormant box cars revived moderately.”

Based on first-half assemblies and existing backlogs, EPA projects car deliveries will total 66,500 units by year’s end. Deliveries then will ease moderately next year to 63,000 units as “box car and centerbeam demand remains lackluster, coal car deliveries flatten and small-cube covered hopper assemblies ease from their frenetic pace during the past three years,” EPA said.

Beyond 2008, the firm expects deliveries to moderate somewhat, but remain at historically high levels. Deliveries are projected to total 62,800 units in 2009, then gradually fall to 60,300 units in 2012.