Following a weak start in commodity movements in the first two months of 2018, demand for freight cars has remained steady, according to the most recent analysis from Economic Planning Associates—and it’s going to improve significantly over the next four years.
Deliveries of 13,099 cars in this year’s opening quarter were almost even with fourth-quarter 2017 deliveries of 13,408. And, close to 5,000 cars were added to backlogs in the first quarter. As a result, current backlogs of 55,216 units represent 4.2 quarters of assemblies at current production rates.
“Railroad traffic was off to a slow start this year,” noted EPA President Peter Toja. “Rail commodity haulings struggled in January and February, but rebounded in March.”
That rebound is reaching higher. Railroad freight traffic continued to improve in April, the first month of 2018’s second quarter, according to Association of American Railroads data.
“While our expanding economy will support growth in total railcar demand, some car types will advance at a more rapid clip than the overall market,” said Toja. “During the next two years, strength in boxcars, covered hoppers, intermodal equipment, and mill gons will be dampened by continued weakness in coal equipment and tank cars. We currently expect railcar deliveries to amount to 48,500 cars this year and 48,800 cars next year. Longer term, we look for renewed growth in demand for tank cars and coal cars to expand railcar deliveries from 50,000 cars in 2020 to 58,500 cars in 2022.”
Following is Toja’s analysis of particular car types:
“Demand for boxcars surged in the opening quarter of this year. Based on the recent strength in demand for this equipment and current backlogs, we are raising our 2018 and 2019 deliveries estimate from 2,000 to 2,500 cars each year. We expect deliveries of about 2,000 cars per year during the longer term.
“Demand for hi-cube covered hoppers continues at a robust level. Based on backlogs, expansion of petrochemical activities, and further growth in ethanol production, we expect deliveries of 8,000 cars this year and 6,000 cars in 2019. Longer term, we look for assemblies of some 5,000 cars per year from 2020 through 2022.
“Demand for small-cube covered hoppers is expanding at a rapid pace. Based on current backlogs and ongoing strength in demand, we expect deliveries of 9,000 cars this year. After 7,000 cars are delivered next year, we look for deliveries of 6,000 small-cube cars each year from 2020 through 2022.
“Demand for intermodal equipment is expected to expand both this year and next as well as out to 2022. Based on existing backlogs and projected intermodal growth, we expect assemblies of 6,000 cars and platforms this year and 8,000 deliveries in 2019. From 2020 through 2022, intermodal equipment assemblies will expand from 11,000 to 14,000 units.
“Based on first-quarter assemblies and backlogs, and a rebound in auto sales and production as well as continued strength in industrial activities, we look for Class F flat car deliveries of 3,000 both this year and next year. From 2020 through 2022, we expect deliveries of 2,500 cars each year.”