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Rail News: Mechanical

EPA report: Robust demand will drive rail-car assemblies to 40,400 in 2011, 51,300 in 2012


Despite a sluggish economy in the third quarter, the rail-car market’s upside continued to “astonish,” according to Economic Planning Associates Inc.’s (EPA) October “Rail Car Report.”

Third-quarter orders totaling 20,165 units far outpaced deliveries of 12,519 units, bringing the backlog to 65,044 units at September’s end — significantly higher than the opening-year backlog of 22,658 cars, the report states.

“Even with the acceleration in third-quarter production, existing backlogs still represent 5.2 quarters of deliveries. As a result, car builders will begin the fourth quarter with a formidable level of cars in their backlogs,” EPA officials said in the report.

Rail-car demand was broad-based in the third quarter, led by “significant strength” in demand for tank cars and small-cube covered hoppers, the report states. Mid-size covered hoppers, coal cars and intermodal platforms also posted solid order levels.

“We believe that orders during the next year or so will continue to advance, albeit at a more moderate pace,” EPA officials said. “Replacement pressures have intensified among a number of car types, such as box cars and various covered hoppers. At the same time, the shift to aluminum-bodied coal cars will stimulate demand while strict regulation of hazardous materials being transported on tank cars will boost demand for newer pressurized tank cars.”

Based on current backlogs and anticipated higher demand for various cars, EPA projects assemblies of 40,400 cars cars this year followed by 51,300 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, “ EPA officials said. “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.”

Other market factors also will help drive an acceleration in rail-car demand, which will result in deliveries climbing to 54,300 units in 2013, the report states. Deliveries then will continue to escalate, reaching 63,500 units in 2016, EPA said.

Contact Progressive Railroading editorial staff.

More News from 10/31/2011