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8/5/2009



Rail News: Rail Industry Trends

EPA report: Rail-car deliveries to drop to 24,800 units in '09, 14,750 units in '10


In the second quarter, recession-depressed rail traffic in major commodity segments primarily caused rail-car orders to tumble to 2,165 units vs. 2,374 units in the first quarter, according to Economic Planning Associates Inc.’s (EPA) latest “Rail Car Overview” report.

As a result of sluggish car orders, assemblies totaled only 14,120 units in the first half, dropping net backlogs to 21,558 units on June 30 compared with 31,921 units on Dec. 31, 2008, the report states.

“With some 20 percent of the various fleets on the sidelines, the recession in full force, a sharp decline in rail-car loadings and the constrained financial environment, the outlook for rail-car deliveries this year and next continues to dim,” EPA officials said, adding that they anticipate continued weakness in rail traffic for the majority of the second half.

Based on second-quarter orders, first-half assemblies and other market factors, EPA now has “moderately lowered” its short-term delivery forecasts to 24,800 cars in 2009 and 14,750 cars in 2010.

“The extremely low levels of deliveries this year and next will serve to intensify the pressure to replace aged equipment in various fleets during the longer-term forecast horizon,” the report states.

Following the two “dismal” years, car deliveries will moderately rebound to 27,500 units in 2011, then increase annually to 57,000 units by 2014, EPA officials believe.

“Beginning in 2011, far stronger economic activities will provide support for certain rail-car assemblies, while an improvement in the financial environment and higher gasoline prices will stimulate 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.”


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