Railcars reactivating rapidly

Written by William C. Vantuono, Editor-in-Chief
oil tank cars

As of May 7, 2018, there were 306,500 railcars in storage, and their numbers should drop below 300,000 before the third quarter, “a level that historically correlates with better railcar orders,” according to  Susquehanna International Group Equity Research Analyst-Industrials Bascome Majors. “The overhang of stored railcars continued to fall materially month-over month during April,” he notes. “Total railcars in storage fell for the fourth straight month, by 8,700. That equals a rate of around 2.8% month-over month.”

The percentage of the North American fleet in storage fell to 18.6%, the lowest level in nearly three years. By comparison, on July 1, 2015, there were 283,600 railcars in storage, or 17.8% of the fleet.

Declines in stored railcars were broad-based in April, with all car types falling month-over month for the second consecutive month. Open-top hoppers in storage (most likely coal) fell by 3,200, or 8.6%, month-over month for back-to-back months of sequential declines. This snapped six straight months of cars exiting service and returning to storage.

Tank cars (34% of total empty railcars; 25% of the fleet) saw 1,800 cars exit storage. One thousand flat cars returned to service; 170 boxcars returned to service. Some 115 other car types returned to service as they exited storage.

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