PFL Railcar Report 2-7-2022

“All our dreams can come true, if we have the courage to pursue them.”

– Walt Disney.

Jobs Update

Initial and Continuing Jobless Claims

• Initial jobless claims for the week ending January 29th came in at 238,000, down -23,000 people week over week.

• Continuing claims came in at 1.628 million people versus the adjusted number of 1.672 million people from the week prior, down -44,000 people week over week.

Stocks closed mixed on Friday of last week but higher week over week

The DOW closed lower on Friday of last week, down -21.42 points (-0.06%), closing out the week at 35.089.74 points, up 364.27 points week over week. The S&P 500 closed higher on Friday of last week, up 23.09  points  and closed out the week at 4,500.53, up 68.68 points week over week. The Nasdaq closed higher on Friday of last week, up 219.19 points (1.58%) and closed out the week at 14,098.01, up 327.44 points week over week.

In overnight trading, DOW futures traded higher and are expected to open at  34,993 this morning up 15 points.

Oil hits seven-year peak on political risks, U.S. Weather.

Oil prices surged to seven-year highs on Friday of last week, extending their rally into a seventh week on ongoing worries about supply disruptions fueled by frigid U.S. weather and ongoing political turmoil among major world producers.  West Texas Intermediate (WTI) crude closed up $2.04 (2.3%) on Friday of last week to settle at $92.31  up $5.49 per barrel week over week, while Brent closed up $2.16  to settle at $93.17  per barrel up $1.47 per barrel week over week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.0 million barrels week over week. At 415.1 million barrels, U.S. crude oil inventories are 9% below the five-year average for this time of year

Total motor gasoline inventories increased by 2.1 million barrels  week over week and are 2% below the five-year average for this time of year.

Distillate fuel inventories decreased by 2.4 million barrels week over week and are 19% below the five-year average for this time of year.

Propane/propylene inventories decreased by 4.3 million barrels week over week and are 12% below the five year average for this time of year.

Propane prices continued to move higher week over week and were up another 3 cents closing at $1.21  per gallon up 32 cents per gallon year over year amid continued cold weather.  In natural gas, Asian LNG prices fell this week, tracking gas prices in Europe, amid muted demand from China as the Lunar New Year holiday reduced trading activity in Northeast Asia.  The average LNG price for March delivery into Northeast Asia fell to $25/mmBtu, $2 or 7.4% lower week over week The average price for April delivery was seen at $27.50/mmBtu.

Overall, total commercial petroleum inventories decreased by 5.8 million barrels week over week.

U.S. crude oil imports averaged 7.1 million barrels per day for the week ending January 28th, an increase by 800,000 barrels per day week over week. Over the past four weeks, crude oil imports averaged 6.5 million barrels per day, 9.6% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) averaged 433,000 barrels per day, and distillate fuel imports averaged 250,000 barrels per day for the week ending January 28th.

U.S. crude oil refinery inputs averaged 15.2 million barrels per day during the week ending January 28, 2022 which was 248,000 barrels per day less week over week. 

As of the writing of this report, WTI is poised to open at $91.57, down 74 cents per barrel from Thursday’s close.

North American Rail Traffic

Total North American rail volumes were down 6.3% year over year in week 4 (U.S. -5.6%, Canada -8.4%, Mexico -7.7%) resulting in quarter to date volumes that are down 10.9% year over year (U.S. -9.5%, Canada -16.3%, Mexico -8.6%). 8 of the AAR’s 11 major traffic categories posted year over year declines with the largest decreases coming from intermodal (-10.6%), grain (-14.2%) and motor vehicles & parts (-15.6%). The largest increase came from coal (+10.5%).

In the East, CSX’s total volumes were down 4.6%, with the largest decreases coming from coal (-19.1%), intermodal (-3.1%) and motor vehicles & parts (-18.2%). NS’s total volumes were down 10.0%, with the largest decreases coming from intermodal (-12.8%) and motor vehicles & parts (-15.7%).

In the West, BN’s total volumes were down 4.2%, with the largest decreases coming from intermodal (-11.1%) and petroleum (-17.1%). The largest increase came from coal (+14.5%). UP’s total volumes were down 0.8%, with the largest decreases coming from intermodal (-9.6%) and grain (-19.0%). The largest increases came from coal (+36.6%) and chemicals (+6.4%).

In Canada, CN’s total volumes were down 6.2%, with the largest decreases coming from intermodal (-12.6%) and grain (-21.7%). The largest increase came from coal (+86.7%). Revenue per tonne miles was down 9.9%. CP’s total volumes were down 4.6%, with the largest decrease coming from farm products (-66.2%). Revenue per tonne miles was down 8.4%.

KCS’s total volumes were up 0.4%, with the largest increase coming from grain (+46.8%). The largest decrease came from petroleum (-38.6%).

Source: Stephens

Rig Count

North American rig count is up by 4 rigs week over week.  The U.S. rig count was up by 3 rigs week over week and up by 221 rigs year over year. The U.S. currently has 613 active rigs. Canada’s rig count was up by 1 rig week over week and up by 47 rigs year over year and Canada’s overall rig count is 218 active rigs.  Overall, year over year, we are up 268 rigs collectively.

International rig count which is released monthly is up by 7 rigs week over week and up by 164 rigs year over year. Internationally there are 841 active rigs.

North American Rig Count Summary

A few things we are keeping an eye on:

Petroleum Carloads

The four-week rolling average of petroleum carloads carried on the six largest North American railroads rose to 23,742 from 22,882, a gain of 860 rail-cars week over week. Canadian volumes were up: CP volumes were up by 29.8% and CN volumes were up 1.4% week over week.  U.S. volumes were mostly lower with the UP having the largest percentage increase (up by 5.5%).  The NS had the largest percentage decrease down by 12.6%.

GoFundMe Succumbed to Canadian Government Political Pressure and Cut off Funding to Canadian Truckers after more than CAD $10M was raised

The platform says it will automatically refund $10 million in donations.  On Friday, the platform GoFundMe froze the convoy’s official campaign, claiming law enforcement convinced the company that the convoy had become violent and unlawful.

GoFundMe encouraged donors to submit a refund form, and said that any funds not properly returned to donors would be donated to a charity chosen by the Freedom Convoy.

Within hours, however, GoFundMe walked back the refund applications, instead announcing it would be refunding donors automatically.  Florida Gov. Ron DeSantis said that he would “investigate” the company, accusing them of fraud. GoFundMe also drew the ire of Texas Attorney General Ken Paxton, who stated on social media that he would be launching a fraud investigation. GoFundMe faced immediate backlash for the announcement with tens of thousands of comments on their social media posts about the cancellation. Critics of the company’s haphazard cancellation include Tesla CEO Elon Musk, who questioned whether there is a “double-standard,” given past fundraisers for legal funds in defense of antifa members and criminal protesters.  Stay tuned to PFL,  we don’t think this one is over.  There is talk about the truckers organizing under another platform sympathetic to their demonstrations.

Railway Supply Institute Release Data on New Railcar Orders

Newly released data by the Railway Supply Institute (RSI) American Railway Car Institute Committee (ARCI) showed a 50% increase in fourth-quarter 2021 freight railcar orders, compared to third-quarter 2021. The backlog increased 14%, while deliveries remained relatively flat.

Orders in Q42021 increased +297% year over year to 13,477 railcars versus 3,397 cars in Q42020 and are up +57% sequentially from 8,607 cars in Q32021. The industry delivered 8,161 railcars in the quarter, higher than the 6,216 railcars delivered in Q42020 and lower than last quarter where the industry delivered 8,298 railcars. The backlog now stands at 42,993 railcars, up from last quarter’s level of 37,779 railcars. Expect this trend to continue folks as less desirable cars continue to be scrapped and the market is scarce for non-tank and certain hoppers that have some inventory to go through.  See below:

Source: Railway Supply Institute

Some Key Economic Indicators

U.S. GDP grew on an annualized 6.9% in Q4 2021 from Q3 2021 based on the first preliminary estimate released January 27th  by the Bureau of Economic Analysis (BEA).

At first glance 6.9% looks not so bad, however, 4.9% of growth came from American companies rebuilding inventory. Normally, such a jump in inventories would get people worried that there would soon be a payback, with businesses drawing off excess stock and producing less. However, over the course of the pandemic inventories became badly depleted. There is reason to believe that inventory accumulation will continue to contribute to economic growth over the course of this year as the supply chain catches up with itself.

Purchasing Managers Index (“PMI”) – The PMI (which covers manufacturing) and the Services PMI (covering services) are both from the Institute for Supply Management. They are based on surveys of supply managers around the country. The surveys track the direction of changes in business activity. An index reading above 50% indicates expansion; below 50% means contraction. The more above or below 50, the faster the pace of change.

The PMI fell from 58.8% in December to 57.6% in January.  The lowest it’s been since September 2020. The new orders component of the PMI was 57.9% in January, down from 61.0% in December and the lowest it’s been since June 2020. Despite the December declines, the index is firmly in above the 50 expansion territory.

In a press release, Tim Fiore, who manages the PMI, said, “Limited expansion strength in production in January, primarily due to absenteeism rates as a result of omicron, was the biggest reason PMI growth was held back.”

Total U.S. industrial production dropped slightly in December 2021 — down a preliminary 0.1% from November 2021, but it was still the second highest since November 2019. December 2021 was 3.7% higher than December 2020 and 0.6% above its pre-pandemic February 2020 level.

Manufacturing output, which is 75% of total output, fell a preliminary 0.3% in December, but it too was still the second highest it’s been since January 2019. In addition, a decline of 1.5% for utility output in December was mostly offset by a 2.0% gain for mining.

Industries pertinent to railroads with large gains in output in December included nonmetallic minerals (up 5.3%), grain mill products (up 5.0%), and agricultural chemicals (up 3.4%). Petroleum refineries (down 1.3%), utilities (down 1.5%), and motor vehicles & parts (down 1.3%) were among the industries with decreases in December. Excluding motor vehicles, output was down 0.2% in December.

Total U.S. capacity utilization in December was a preliminary 76.5%, down a notch from 76.6% in November; the second-highest it’s been since December 2019; and 3.1 percentage points below its long-run (1972–2020) average. Capacity utilization for manufacturing was down to 77.0% in December from 77.2% in November, but was still the second-highest it’s been since December 2018.

The Bureau of Labor Statistics (BLS) announced on February 4th that a preliminary and seasonally adjusted 467,000 net new jobs were created in January 2022. That’s far more than most economists expected going in (some economists even predicted net job losses) and seems likely to reinforce the Federal Reserve’s resolve to raise interest rates in the near future. The employment data released on February 4 included BLS’s annual revisions to seasonal adjustment factors and population estimates.   Bottom line the official unemployment rate in the U.S. now stands at 4.0%.

Consumer Confidence – The Conference Board’s index of consumer confidence was 113.8 in January 2022, down from 115.2 in December, slightly above where it was in fall 2021, and well below where it was in spring and summer 2021.

Consumer Spending: Total consumer spending not adjusted for inflation fell a preliminary 0.6% in December 2021 from November 2021, its first decline in 10 months.

Adjusted for inflation, total consumer spending fell a preliminary 1.0% in December from November, the largest month over month decline in 10 months.

In December, spending on goods fell a preliminary 2.6%, their second straight month-to-month decline. Supply chain issues and an early start to the holiday shopping season likely blunted spending on goods in December. Spending on services rose a preliminary 0.5% in December, largely due to an increase in health care spending — likely related to the rapid spread of the Omicron variant during the month.

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We have been extremely busy at PFL with return on lease programs involving rail car storage instead of returning cars to a shop.  A quick turnaround is what we all want and need.   Railcar storage in general has been extremely active.  Please call PFL now at 239-390-2885 if you are looking for rail car storage, want to trouble shoot a return on lease scenario or have storage availability.  Whether you are a car owner, lessor or lessee or even a class 1 that wants to help out a customer we are here to “help you help your customer!”

Leasing and Subleasing has been brisk as economic activity picks up. Inquiries have continued to be brisk and strong Call PFL Today for all your rail car needs 239-390-2885

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PFL is seeking:

• 50 25.5 Tanks C&I for heavy fuel oil in Texas dirty to dirty 1-2 years negotiable
• 300 5800 Covered hoppers needed for plastic – 5 year lease – negotiable
• 50 29K C&I Tanks for veg oil to purchase – Immediate need
• 20 pressure cars 340’s in SE clean or last in butane or propane 1-2 years Immediate Need
• 15 5200-5500 PD hoppers in the west UP for 5 years for soda ash negotiable
• 30 5800 and 6250 covered gons for sale
• 100 117Js  Coiled and Insulated dirty to dirty service BNSF CN or CP
• 50, 5800cuft or larger Covered Hopper for use in DDG needed in the Midwest for 3-4 years. Immediate need.
• 10 25-28K C&I tanks for veg oil needed in the south for 2 years negotiable
• 10-20 Covered hopper grain cars in the midwest 5200-5500 2-3 years
• 20-30, 19K Tank Cars for Caustic Soda needed in Texas off the UP or BN.
• Unit Train of 28.3K 117Js for use in Crude service off the CN or BN in MT, ND, or Alberta.
• 100-150 340 pressure cars for LPG service in Texas
• 70-90 Biodiesel cars C&I any type car in the midwest or TX 1-2 years
• 15-25, 23.5K cars for chem needed in the South for 1 Year.
• 50 117R 30K+ for gasoline in the midwest CSX or NS for 6 months negotiable
• 100 Moulton Sulfur cars for purchase – any location – negotiable
• 10 DOT111 or 1232 25.5K 286 GRL for Crude Glycerin anywhere in US 1 year lease
• 12 Plate F 286 GRL Boxcars 12’ plug doors midwest preferred for 1 year lease
• 30-50 Log Flats with stanchions 286K GRL in the midwest/east CSX NS 1-3 years negotiable
• 50 Ag Gons 2500-2800cuft 286k GRL in the east CSX for 5 years negotiable
• 25 Covered wood chip Gons 6000CF 286 GRL any location for 1-3 years negotiable
• 25 Boxcars for paper 6000CF 286 GRL 1-3 years anywhere
• 10-20 propane cars needed for a short term lease in ND off the CP.
• 100 15K Tanks 286 for Molten Sulfur in the Northeast CSX/NS for 6 months negotiable
• 200 117Js 28.3 C&I 286 in the North on the CN for 1 year Crude dirty to dirty Negotiable
• 20 5650 PD Hoppers 286s needed in Montana for talc BNSF for 3-5 years
• 100 Open Top Hoppers needed in the Midwest for coal BNSF 1 year
• 100, 5800 Covered Hoppers 286 can be West or East for Plastic 3-5 years
• 50-100, 4750 Covered Hoppers needed for Pet-coke. Can take in the South.
• 70, 117R or J needed for Ethanol for 3 years.  Can take in the South.
• 30, 25.5’s or greater food grade Kosher veg oil cars for 6-12 months
• 50, 6500+ cu-ft Mill Gon or Open Top Hopper for wood chips in the Southeast for 5 Years.
• 25 bulkhead flats 286 any class one for up to 5 years Negotiable
• 20, 19,000 Gal Stainless cars in Louisiana UP for nitric acid 1-3 years – Oct negotiable
• 10, 6,300CF or greater covered hoppers are needed in the Midwest.
• 2, 89’ Flat cars for purchase or lease – needed in TX off the BNSF

PFL is offering:

• Various tank cars for lease with dirty to dirty service including, nitric acid, gasoline, diesel, crude oil, Lease terms negotiable, clean service also available in various tanks and locations including Rs 111s, and Js – Selection is Dwindling. Call Today!
• 200 Clean C/I 25.5K 117J in Texas. Brand New Cars!
• 150 25.5 111’s in the midwest for sale – Negotiable
• 150 117R’s 31.8 clean for lease in Texas – negotiable
• 31.8K Tank Cars last in Diesel. Dirty to dirty in Texas
• 200 117Js 29K OK and TX Clean and brand new – Lined- lease negotiable
• 100 117Rs dirty last in Gasoline in Texas for lease Negotiable
• 90 117Rs 30K located in Alberta CN or CP Refined Products Dirty – negotiable
• 25 BRAND NEW 5161 Sugar Hoppers in Arkansas UP – negotiable
• 99 340W Pressure Cars various locations Butane and Propane dirty negotiable
• 100 73 ft 286 GRL riser less deck, center part for sale,
• 19 auto-max II automobile carrier racks – tri-49 for sale – negotiable
• 10 food grade stainless steel cars sale or lease
• 20 20K Stainless cars in 3 locations in the south – sale or lease – negotiable
• 30 CPC 1232 25.5K C/I Pennsylvania NS clean negotiable
• 100-150 29K C/I 117J cars for lease. Dirty in Bakken crude and can be returned dirty.
• 100 29K C/I 1232 cars for lease. Dirty in Heavy Crude and can be returned dirty.
• 50 29K 117Js in Nebraska for sale or lease clean last in crude – available Feb 2022
• 100 117Rs 29K clean last used in crude Washington State – price negotiable sale or lease
• 21 111s 29K tanks last in alcohol dirty on the CN in Wisconsin for lease price negotiable
• 100 111s of various volumes and locations last in fuel oil dirty price negotiable
• Various Hoppers for sale and lease 3000-5800 CF 263 and 286 multiple locations negotiable
•  28 20K Veg oil cars for lease in Arkansas – Negotiable
• 100 3200 Covered Hoppers for sale price negotiable
• 100 Center beam Flats with risers 73ft in SD and Iowa for sale negotiable

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Call PFL today to discuss your needs and our availability and market reach. Whether you are looking to lease cars, lease out cars, buy cars or sell cars call PFL today 239-390-2885

PFL offers turn-key solutions to maximize your profitability. Our goal is to provide a win/win scenario for all and we can handle virtually all of your railcar needs. Whether it’s loaded storage, empty storage, subleasing or leasing excess cars, filling orders for cars wanted, mobile railcar cleaning, blasting, mobile railcar repair, or scraping at strategic partner sites, PFL will do its best to assist you. PFL also assists fleets and lessors with leases and sales and offers Total Fleet Evaluation Services. We will analyze your current leases, storage, and company objectives to draw up a plan of action. We will save Lessor and Lessee the headache and aggravation of navigating through this rapidly changing landscape.

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