Friday, June 15, 2012

Grain car leasing reported soft

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Grain car lessors are reporting an extremely soft market for all but the largest of jumbo covered hoppers. (The jumbos are working and we couldn't find any lessors that have this car type parked.)

Lessors of older 4,750s report that they are parking cars of this variety when they come off lease with few opportunities to redeploy them short of the start of the grain season later this year.

Lessors report that where there is activity, it involves lessees moving out of the older 4,750 cubic foot cars with a flight to quality as they move up to larger capacity 286 jumbo covered hoppers.

Overall market slackness seems to have a variety underlying causes. Chicago Freight Car's Paul Deasy says that despite talk of the potential for record harvests, he is seeing limited shipper activity seeking to execute new grain car leases. He indicates that railroads are reporting that they can supply the cars that shippers will need for the coming harvest season.

Paul observes that most of the grain that moves by rail is corn, and that more corn has been moving by truck than had originally been expected. Paul also points out that railroad velocity has continued to improve and that increasing velocity and reduced transit times also reduces the total number of railcars needed to move any commodity.

What about exports?

There are reports that exports may increase to destinations like China, but that these moves may be met by railroad (particularly BNSF) supplied cars in unit trains moving grain to ports.

Douglas John Bowen

Douglas John Bowen is Managing Editor of RAILWAY AGE. He also served as Editor of Intermodal Age from 1989 to 1991, and has held various positions at Inbound Logistics magazine, High Speed Transport News, The Journal of Commerce, and CNN/Money. Bowen began his journalism career at the Asbury Park Press, a New Jersey daily newspaper. A graduate of Rutgers University, Bowen resides in Hoboken, N.J. He served as president of the New Jersey Association of Railroad Passengers (NJ-ARP) from 1987 to 2000 and again from 2004 to 2010, serving on the NJ-ARP board from 1984 until 2012; he remains a member of the statewide organization.