Thursday, April 03, 2014

Freight cars: Growth, renewal continue

Written by  David D. Humphrey, Ph.D., Senior Analyst, Railinc Corp.
Freight cars: Growth, renewal continue William C. Vantuono
Understanding the dynamic North American revenue-earning rail equipment fleet is important to logistics system stakeholders including railroads, shippers, financial institutions, car builders, suppliers, and others associated with the industry. Railinc’s annual analysis of the fleet is focused on highlighting key trends and changes.

Railinc1For the second consecutive year, the size of the revenue-earning fleet increased by at least 14,000 cars, nearly reaching its 2009 level. At year-end 2013, it totaled 1.513 million units, up 0.9% from year-end 2012 to year-end 2013, compared with a 1.1% increase the previous year (Figure 1). Tank cars drove the growth, increasing by 7.6% over 2012. Flat cars were up by 1.6%, while covered hoppers were unchanged. In contrast, box cars (including refrigerated cars) were down by 3.4%; hoppers by 2.7%; and gondolas by 1.7%.

The average age of railcars in the fleet continued to decrease in 2013 (Figure 2). For the second consecutive year, the average age was down, decreasing 0.1 years, to 19.9 years. More new cars were added as older cars left the fleet in 2013. This suggests the economy continues to head in a positive direction, since historical data show that fewer new railcars are added to the fleet during, and immediately following, economic dips.

Railinc 2More than 40,000 new cars have joined the fleet inRailinc 3 of the past three years, and the number of new cars added in 2013 was considerably higher than in 2009 and 2010 combined. Historically, the average age of the fleet and the number of cars added to the fleet mirror the economic environment (Figure 3). When the economy is strong, as in the mid-1990s and mid-2000s, the fleet tends to berefurbished with the addition of new equipment. During periods of recession—such as around 1991, 2002, and 2009—the amount of added new equipment decreases significantly.

During the past 20 years, the majority of new railcars added to the fleet have had a GRL (gross rail load) of 286,000 pounds, despite a decline that corresponded to the economic downturn in 2009 and 2010. This trend continued in 2013 (Figure 4). A significant number of GRL 220 cars joined the revenue-earning fleet in 2013, though most were automotive flat cars. GRL 286 cars have dominated new additions to the fleet since the early 1990s because they enable operational efficiencies that reduce costs and ease logistics challenges. The fleet continues to add GRL 263 cars and GRL 220 cars but at much smaller rates than the larger cars.

Several sub-fleets of similar types of equipment comprise the revenue-earning fleet. Railinc selected them for analysis because they carry commonly shipped commodities and make up the fleet’s largest percentages:

Railinc 4• After two consecutive years of growth, the covered hopper sub-fleet held steady in 2013 at 479,000 cars. Covered hoppers are the largest sub-fleet in North America, making up about 32% of the total. During the past four years, more than 30,000 new small-cube covered hoppers have joined the fleet, more than all other sizes of covered hoppers combined.

• The number of gondolas dropped by 1.7% in 2013 after increasing by 0.9% the previous year.

• The tank car fleet continued its growth in 2013 to 339,000 cars, increasing 7.6%—the largest increase of any of the sub-fleets. GRL 263 cars still dominate the sub-fleet, though the number of GRL 286 cars increased considerably in 2013. Nearly 11,000 medium tanks—those with capacities between 22,500 and 27,500 gallons—joined the North American fleet in 2012 and 2013. Almost 30,000 large tanks with capacities greater than 27,500 gallons were added to the fleet during 2012 and 2013—nearly triple the number of medium tanks.

• The number of open hoppers decreased by 2.7% in 2013, to 145,000, continuing the sub-fleet’s steady decline.

• The box car fleet, the smallest sub-fleet, is older than other sub-fleets and has decreased in size for several years, in part because of the addition of higher-capacity box cars and network efficiencies that reduce the turnaround time of box cars. The size of the box car sub-fleet continued its downward trend in 2013, decreasing to 118,000 cars, and is down 14% since 2009.