Monday, January 25, 2010

2010 rail capital spending: Passenger vs. freight

Written by 

A survey conducted by Railway Age in late 2009 shows that the market for passenger railcars exceeded that for freight railcars last year and may do so again this year.

In 2009, 1,141 new passenger cars worth around $2 billion were delivered to passenger rail operators in the United States and Canada, and on Dec. 31, 2009, manufacturers had a backlog of 2,380 new passenger railcars on order and undelivered.

Approximately 22,650 new freight cars were delivered in 2009, valued at around $1.6 billion. The current estimate for 2010 is 15,750 freight cars. 

“This does not mean that freight railroad capital spending is not continuing at a high level,” said Railway Age Publisher Robert P. DeMarco. “In fact, information made available to Railway Age shows that capital investment by our four largest railroads this year will be in the multi-billions, approaching the high levels of the last two years, though the emphasis will be changed.”

“While the freight car market will not heat up until the economy does,” said DeMarco, “the railroads will be spending heavily on new signaling initiatives, to improve safety and add capacity; they will invest in new and expanded intermodal facilities, to handle the fastest growing part of the railroad business as trucks increasingly turn over much of their business to the railroads for the long haul; and improvements to specific freight corridors will continue, in some cases to make room for the new business coming from trucks.

“Meanwhile, the renewed interest passenger rail of all kinds—intercity, metro, regional, light rail—is a welcome change in national transportation policy. It is also of importance to the companies that develop and market the technologies and products that are the key to the future of both passenger and freight rail,” DeMarco said.

As for freight rail capital spending in 2010, BNSF Railway, CSX, Norfolk Southern, and Union Pacific will be committing approximately the same amount as 2009. BNSF plans to spend $2.4 billion; CSX, $1.7 billion; NS, $1.4 billion; and UP, $2.5 billion. While no significant freight car or locomotive acquisitions are planned for this year, a far larger amount of signaling and communications dollars will be applied to Positive Train Control projects than in prior years, due to the federal PTC mandate.