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RAIL EMPLOYMENT



Rail News Home Rail Industry Trends

2/6/2009



Rail News: Rail Industry Trends

EPA report: Fourth-quarter car orders fall to lowest level in seven years


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The recession caught up to the rail-car builders in the fourth quarter. Orders totaled only 4,259 cars — the lowest level since first-quarter 2001, according to Economic Planning Associates Inc.’s (EPA) quarterly “Outlook for Rail Cars” report.

“Even more depressing was the evaporation of some 10,000 ethanol-related cars from the backlogs as Trinity Industries announced that it had ‘indefinitely deferred’ the assemblies of 5,330 tank cars and 4,670 covered hoppers while awaiting a more stable ethanol environment and a more favorable financial environment,” EPA officials said in the report’s executive summary.

However, despite a dismal fourth quarter, car and intermodal platform assemblies reached 59,954 in 2008, an “impressive level from an historical perspective,” the report states. Yet with orders at low ebb, car builders entered 2009 with backlogs of 31,921 units, the lowest level since first-quarter 2003.

“It now appears that car builders will survive primarily on backlogs this year,” EPA officials said. “Pending a cohesive stimulus program from the Administration and some meaningful strides in easing the continued tight financial environment, we remain extremely concerned about the future path of economic activities. However, we do see some glimmer of hope for activities in 2010.”

Based on beginning-year backlogs and limited new-car demand, EPA projects car deliveries to total 28,950 units this year and assemblies to total 26,000 units in 2010. Beginning in 2011, a stronger economy will increase demand for certain rail cars, while an improved financial environment and higher gas prices will stimulate demand for ethanol and DDG cars. In addition, replacement pressures, technological advances and legislative measures will help drive up demand for a variety of cars, EPA officials said.

Replacement pressures will mount for box and multi-level flat cars, and mid-sized and small-cube covered hoppers. At the same time, healthier consumer markets will propel demand for center beams, high-cube covered hoppers, tank and coal cars, and intermodal equipment, EPA officials said. As such, deliveries are projected to reach 38,500 units in 2011, then increase steadily each year to 58,000 units by 2014.


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