‘Where Are The Loads? There Ought To Be Loads’

Written by David Nahass, Financial Editor
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FINANCIAL EDGE, RAILWAY AGE FEBRUARY 2023 ISSUE: January is always an unusual month. Holiday coziness is quickly exchanged for the realities of credit card bills, a “don’t talk to me about what you did in 2022; what are you going to do for me in 2023?” attitude from employers (apologies to JFK) and a new set of 52 weeks over which to compare railcar loadings. Ask any fan from any football team trying to survive through the NFL playoffs: January is an odd month.

This January and February are made more challenging over worries about an impending recession. From the rail perspective, it’s not a leap to say that the recession has already begun. Rail loadings are generally forward indicators, and last year’s barely break-even (on general freight) levels are being backed up with a weak start to 2023 (combined with the impact of an early lunar new year). Rail is not alone. J.B. Hunt announced pessimism about the first half of 2023 while also acknowledging that the end of 2022 was tepid. That is not a good sign for intermodal growth in 2023. 

As the song goes, “Send in the recession. Don’t bother—it’s here.”

North American rail has two powerful trends for the finance side of the rail business in 2023. On the one hand, the industry needs growth, and prospects for growth seem dim. On the other side, car supply is tight and new car orders are not expected to touch 50,000 deliveries in 2023. Softer production numbers (along with lackluster rail service) are likely to keep car supply tight through all of 2023 and into 2024. That’s bad news for companies that load railcars, but good news for railcar owners who are enjoying higher lease rates. 

Loadings growth in North America needs to come from somewhere. “Financial Edge” has, in the past, addressed the struggles of the railroads to balance the needs and demands of the NIMBYs and the YIMBYs. Recently, the Chicago Tribune addressed just that kind of battle related to Norfolk Southern’s (NS) planned expansion of an intermodal yard in the Englewood section of Chicago’s South Side.

The debate highlighted in the Tribune is at the crux of so much that plagues North American rail right now. The industry needs growth. Growth needs to address the concerns of all involved parties: residents, community leaders, business leaders and workers. Growth cannot come at any cost, but is often seen as an opportunity to balance the scales of economic justice. 

It’s a wonder that the crumbling U.S. infrastructure (in severe need of a refresh and rehabilitation) ever got built. Without TV rights, ad revenue and playoff competition on a Sunday evening, it seems pretty damn hard to generate enthusiasm for the economic spend.

It’s no surprise that NS (or any other railroad) wants to expand near a pre-existing location. Amazon may be able to locate a city-sized warehouse on any tract of barren land 90 minutes outside of a major metro area; rail yards and track don’t just appear. Rail assets can’t, by their nature, provide the logistic flexibility of trucks. Surprise, neither can rail yards. 

Cities and towns grew around rail depots, and it was useful to have rail yards closer to the commercial area. NS is being asked to pay the price (whatever that price ultimately will be) to expand its local footprint. 

Let’s face it: These are tough choices for all parties. If the city of Chicago could effectively develop the location to improve quality of life and create a safer place to live, perhaps there’s a solution that would allow (or maybe better yet incentivize) NS to move that yard to a different location. Barring that, to penalize NS and the community by prohibiting growth makes no sense. 

The cost of doing business had to be reasonable. America and Americans need to decide what they want the railroads to be.

Add another log to the fire (or just shift around the already existing ones) of challenges facing North American rail and growth in 2023.

David Nahass, Railway Age Financial Editor

Like the song says, “Where are the loads? There ought to be loads. Well, maybe next year … ”

At the 2023 Rail Equipment Finance Conference, a roster of industry experts will address issues of industry growth, car supply and car demand for 2023 and beyond. There will be discussions on individual car types and the opportunities for growth in those car classes. Look for a macro and micro review of the rail economy and of those factors impacting growth. Attendance is expected to top 400 participants this year. Confirmed shipper and railroad attendees receive a 50% discount on admission. Register today at

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