Friday, October 18, 2013

Railcar report: Orders slowing; backlog remains

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The Railway Supply Institute's American Railway Car Institute (ARCI) Committee on Friday, Oct. 18, 2013, released its railcar industry order, delivery, and backlog statistics for the third quarter, with tank cars and covered hopper cars continuing to account for most activity.

Industry-wide orders totaled 12,753, down almost 16% from 15,151 in the third quarter of 2012 and also down 14% from 14,850 cars ordered in the second quarter of this year. Deliveries of 12,647 cars were up 2.4% from 12,346 cars a year ago, and also up just 1% from 12,511 cars delivered in the second quarter of 2012.

The third-quarter backlog of 73, 848 cars was up just marginally from the backlog of 73,706 cars at the end of the second quarter, but still up 22.6% from the 60,244 car backlog at the end of 2012, according to ARCI statistics.

"Overall, the industry order number continued to show a downward trend in tank car concentration, which accounted for 5,149 or 40% (down from 6,944 or 47% during 2Q13) of the total orders in the quarter," observed analyst Steve Barger of KeyBanc Capital Markets, Inc. in a note Friday afternoon to clients. "Covered hopper orders, which were the second largest concentration, came in 4,154 or 33% of the total (slightly above 32% last quarter). Together, these two car types accounted for 73% of the total orders in the quarter versus 79% last quarter.

"Specific to tank cars, we note the industry orders of 5,149 are a step down from the record 19,267 during 1Q13 and below the 1Q11-2Q13 average of ~9,500," Barger observed. "For context, we note tank cars account for roughly 20% of the industry-wide fleet of railcars, while non-tank cars account for 80%."

Barger, looking ahead, said, "Based on current production run rates of approximately 30,400 per year (~27,600 last quarter), we estimate the industry has 1.9 years of tank backlog visibility, suggesting the OEMs are quoting delivery times into 2015."