The number of cars in storage declined further last month, marking the 10th consecutive month of declining total storage numbers. As of May 1, 2021, there was a total of 365,379 cars in storage, a decline of 12,862  cars (-3.4%) month over month. The last time storage numbers were this low was October of 2019. There are now 52,740 (-12.6%) fewer cars in storage then this time last year, and the numbers are now well below pre-pandemic levels. At these levels this represents 22.17% of the total North American rail fleet in storage, down from 22.92% last month. The number of cars in service also continues to decline, falling by 2,336 cars to 1,648,237.

Every category of cars we track saw MoM declines as far as the number of cars in storage. The largest declines came from Hoppers, down 5,038 cars or -12.79%.  The smallest decline was Tanks, down 160 cars or .13%. The number of tanks in storage still remains well above pre-pandemic levels and is the only category where this is still the case.

New Railcar orders are beginning to pick up, rising 80% in the 1Q to 6,227 from 3,397 in the fourth quarter of last year. These numbers still remain below pre-pandemic levels and the backlog has been mostly declining.

 One challenge manufacturers will have to contend with is the rising costs of inputs, namely Steel, which Cowen and Company estimates have put a 15%-25% premium on newly built equipment. Cowen predicts that these inflationary costs will hurt manufacturing in the short term to the benefit of lease prices. Longer term they expect orders will pick up as the inventory in storage continues to dwindle. Rising Steel prices are a double-edged sword, however, because this also encourages increased scrapping, which will dwindle down the storage inventory that much quicker.  

If you are need of or have storage available or if you need maintenance, the cleaning of cars or are looking to reposition cars in a cost-effective manner, call PFL today! We can troubleshoot your situation and work diligently to find a solution for you! 

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The total number of cars in storage had a big drop this month, driven primarily by Open Top Hoppers (-11.25%), Gondolas (-9.75%), and Flat cars (-10.99%). The number of Covered Hoppers and Tanks in storage both actually increased slightly last month, and together they represent 66.19% of all the cars in storage. Excluding those two categories every category we track saw sequential MoM declines.

Traffic picked back up across the US as the country thawed from the freeze, with traffic for the last week of March up 16.1% YoY. We are cautiously optimistic; however, these YoY comparisons are inflated due to pandemic related shutdowns according to statements from the AAR. Intermodal volumes for instance are up a whopping 25.8%, but this is driven in large part by the massive disruption to intermodal traffic that occurred around this time last year. The one exception to pandemic disruptions seems to have been grain, as CN just reported its 13^th consecutive month of record grain shipments. Taking into account last year’s pandemic related rail volume drop, “rail traffic has clearly rebounded” and “recent signs of strength in manufacturing are good signs for railroads, too,” AAR’s SVP John Gray noted in the AAR traffic report for March 2021 and the week ending April 3, 2021.

Railcar manufactures, including Greenbrier and Trinity are becoming increasingly optimistic. GBRX reported “its most challenging quarter of the fiscal year” with large drops in railcar deliveries due to “a weak demand environment and extreme winter weather”. “Our near-term outlook is becoming increasingly optimistic as rail fundamentals improve,” Chairman and CEO William A. Furman said. “Rail loadings are up year-to-date, driven by increased traffic in grain, intermodal and other categories. Railroad velocity has slowed by nearly 2 mph. Railcars in storage have decreased by more than 148,000 units from the 2020 peak storage level. Proposed environmental and other regulations in both North America and Europe should support secular demand for rail as a growing mode for freight transport. Fiscal stimulus and proposed infrastructure legislation are expected to further add to demand.” Things should continue to progress for the countries major car owners if freight and equipment fundamentals continue to improve.

If you are need of or have storage available or if you need maintenance, the cleaning of cars or are looking to reposition cars in a cost effective manner, call PFL today! We can trouble shoot your situation and work diligently to find a solution for you! 

If you are a short line operator and you have questions about the 45G tax credit please call PFL today 239-390-2885.

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Extreme weather slowed traffic across the US especially in the states that aren’t accustomed to it. Traffic rates for the third week of February were the lowest on AAR record dating back to 1988. Traffic bounced back quickly in the following week and we are not expecting any long term storage implications as a result. Grain shipments continue to be strong, and the Canadian railroads continue to post record grain traffic.

Class one headcount is nearing a decade low. Railroads are trying to do more with less as they put locomotives in storage and implement PSR. Now that they have taken their first steps towards PSR, NS is looking to put in place in longer/heavier train to help optimize the network.  “Now that these measures have largely been completed, the company has started to increase train lengths and train weights, which resulted in record fuel efficiency in the fourth quarter, Cindy Sanborn said. These measures were taken while deploying a trimmed workforce, she said. NS train lengths and weights increased by 10% over the fourth quarter of 2019, while fuel efficiency rose 3%. “PSR is really about simplifying things and having very good asset turns” and absorbing volume growth into existing trains, Sanborn said.

Call PFL For All Your Railcar Storage Needs Today – We have spaces to offer you North America Wide 239-390-2885

If you are need of or have storage available or if you need maintenance, the cleaning of cars or are looking to reposition cars in a cost effective manner, call PFL today! We can trouble shoot your situation and work diligently to find a solution for you! 

If you are a short line operator and you have questions about the 45G tax credit please call PFL today 239-390-2885.

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Cars continue coming out of storage and carloads are also improving. Grain remains the strongest category, with grain carloads up 40% YoY  last month. If you exclude grain and coal, carloads are actually down by 2.7%. Still, covered hoppers and tank cars together represent 67% of all of the railcars in storage. The number of cars in storage continues to decline steadily as cars are scrapped and new orders are declining. The railway supply institute is reporting a drop in 4^th quarter 2020 railcar orders, deliveries and backlog.  Carbuilders took orders for 3,397 cars in fourth-quarter, a 60% drop compared with 8,464 in Q4 2019, and a 41% decline from 5,783 in Q3 2020. Total orders for 2020 were 17,275—far lower than 2018’s 77,478 and 2014’s peak of 138,234 orders.

Call PFL For All Your Railcar Storage Needs Today – We have spaces to offer you North America Wide 239-390-2885

If you are need of or have storage available or if you need maintenance, the cleaning of cars or are looking to reposition cars in a cost effective manner, call PFL today! We can trouble shoot your situation and work diligently to find a solution for you! 

If you are a short line operator and you have questions about the 45G tax credit please call PFL today 239-390-2885.

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The number of cars in service continued to decline, at its fastest pace all year, down 4340 cars. Railcar manufacturers and leasing companies are setting their sights on the second half of this year for an expected demand recovery. “Greenbrier’s operating footprint is well suited for the market recovery, expected in the second half of calendar 2021” CEO Bill Furman said. He continued, “Overall we’re cautiously optimistic about the U.S. economy and the world during the next 12 months. The recently enacted federal stimulus package, mass vaccine distribution, steady consumer spending and the promise of a robust infrastructure package emerging from a new Congress and administration in Washington are all favorable developments,” Furman said. It will be interesting to see how long the above trends continue to decline if in fact we do have a big demand recovery in the second half 2021. Stay tuned to PFL for the latest and greatest.

The tax incentive to make infrastructure improvements to short-lines could become permanent as a 2021 appropriations bill, recently passed by congress, includes a provision to make to do just that. The credit, also known as the 45G tax credit, was established on a temporary basis despite broad industry support. This provides short lines with a tax credit of up to $3,500 per mile for infrastructure investments. There has already been more than $5 billion of investment since the credit was introduced in 2005.

 “We applaud Congress for their bi-partisan bi-cameral action to make the effective and popular Short Line Tax Credit permanent,” said Chuck Baker, president of the American Short Line and Regional Railroads (ASLRRA), in a statement. “With the passage of this bill, our mission to connect rural and small town America to larger domestic and global markets in a safe, efficient, and environmentally friendly way is set to receive a significant boost. Creating long-term tax certainty will enable small business railroads to meet customer needs throughout the country, particularly in the energy, agriculture and manufacturing industries, immediately and far into the future.”

Call PFL For All Your Railcar Storage Needs Today – We have spaces to offer you North America Wide 239-390-2885

If you are need of or have storage available or if you need maintenance, the cleaning of cars or are looking to reposition cars in a cost effective manner, call PFL today! We can trouble shoot your situation and work diligently to find a solution for you! 

If you are a short line operator and you have questions about the 45G tax credit please call PFL today 239-390-2885.

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“Yesterday, December 7, 1941 — a date which will live in infamy”
– Franklin D Roosevelt Dec 8, 1941

As of December 1st, the total number of cars in storage continued to decline for the fifth consecutive month to 428,544 cars, granted at a slower pace as car storage numbers begin to normalize. This represented a month over month decline of 11,013 stored cars or -2.51% month over month. The number of cars in storage is 32,316 cars higher (8.2%) than this time last year, but almost back to where we were in May. Despite total cars in service declining at an increased pace, the percentage of the total fleet in storage declined to 25.79% from 26.42%  month over month;  we still have a ways to go as this time last year  23.63% of the total fleet was in storage. Finally, looking at pre-pandemic levels, we are 34,694 cars (8.81%) higher than where we were on March 1^st 2020. 

There has been a 15,000 car reduction in the total North American rail fleet since the high in December of last year.  Many think we have further to go as many cars are being scrapped and taken out of service. On a percentage basis this accounts for less than a 1% reduction of the total fleet. Even prior to the pandemic we had nearly 25% of the total fleet in storage; much more than what is needed to cover steady growth and reasonable surge capacity. A lot of these cars may never be used again, either due to regulation or lack of alternative uses for specialty-built car types that serve declining markets. One thing for certain, a bigger reduction in the fleet size is needed help right size the storage numbers.

Most of the categories we track saw a 4th consecutive month over month declines. The two categories that had increased storage numbers this month were Open Top Hoppers and Flats. The number of Vehicle cars declined again this month to a pandemic era low after reversing the downtrend and increasing last month. The number of intermodal cars in storage is also continuing to decline steadily as retail demand strengthens. The number of tank cars in storage is still the hardest hit in the pandemic era by far, still up by nearly 30% since March.  It is also important to note that while the number of cars in service has been declining in every other category of cars we track, the number of tank cars in service is actually still increasing. We talked last month about following the trends of petroleum supplied as a good indication for tank cars in storage and if crude prices continue to be become more favorable for producers these numbers should decline accordingly.

Call PFL For All Your Railcar Storage Needs Today – We have spaces to offer you North America Wide 239-390-2885

If you are need of or have storage available or if you need maintenance, the cleaning of cars or are looking to reposition cars in a cost effective manner, call PFL today! We can trouble shoot your situation and work diligently to find a solution for you! 

If you are a leasing company and having cars being returned on lease call PFL today to secure a return on lease location.

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As of November 1st, the total number of cars in storage continued to decline for the fourth consecutive month, to 439,557 cars in storage. This represented a month over month decline of 12,224 stored cars or -2.71%. This is on par with our thesis that the number of cars in storage would continue to normalize but likely at a slower pace as we head through the end of the year. The number of cars in storage remains 59,561 cars (15.67%) higher than this time last year, but improved from 88,141 cars higher year over year at the start of October. Despite total cars in service continuing to decrease, the percentage of the total fleet in storage declined to 26.42% from 27.12% last month.  We still have a ways to go as this time last year 22.67% of the total fleet was in storage. Finally, looking at pre-pandemic levels, we are 45,707 cars (11.61%) higher than where we were on March 1, 2020. 

Every category we track saw a 3rd consecutive month over month decline in the number of cars in storage except for vehicle cars, which increased by roughly 300 cars. PFL will be keeping a close eye on this category as it was one of the first and the hardest hit coming into the pandemic, and also one of the first to recover.  The number of vehicle cars in storage is a good proxy for the overall economy because it is an indicator of domestic consumption. The number of them in storage is still pretty normal by historical standards but readers should also take into account that over 1000 have been removed from service since March. Evidence of this continued downtrend (except in Vehicle cars) is in the charts below.

The percentage of tank cars in storage was nearly flat Month over Month declining by just under .2%. The number of tanks in storage had been declining by roughly 6000 cars per month for the last three months, and this month declined by just 600. When tracking the number of tanks in storage it is important to note that Petroleum and Petroleum product carloads were down by 21.9% in week 44. This is still one of the hardest hit traffic categories more than 7 months into the pandemic. Although petroleum demand still remains to be a big unknown, we expect this will have a major influence on the number of tank cars in storage.

Railroads and railcar leasing companies are beginning to shift their tones to be more optimistic, especially as railroad traffic has experienced 4 straight weeks of year over year traffic growth. This improvement is an encouraging sign not seen since the beginning of 2019. On improving traffic, Jean Savage, the new Chief Executive of Trinity said: “I think this has us all thinking maybe it’s going in the right direction there.” She added, “And then we’ve had 75,000 cars come out of storage in the last quarter. So, that’s also a great indicator that things might be heading up. So we may have bottomed and started the upturn.” Greenbrier is also optimistic, but cautious. “Economic uncertainty persists across all our end markets, but there are pockets of recovery if longer-term trends are favorable,” said Greenbrier CEO Bill Furman. Both companies spoke of an increased pipeline of inquiries for new and existing rail equipment.

On the manufacturing side, it looks like we are headed for a contraction of the number of cars in service for the first time in 10 years. Trinity’s Jean Savage said “That’s also a benefit for getting some cars out of the system and then opening up the need for new railcar deliveries”. Trinity is estimating that for the industry to get to the point where there is demand to replace railcars, about 85%-87% of the US fleet needs to be moving. We are currently at 73.58% of the total fleet in service. With roughly 55,000 cars estimated to be scrapped, and 31,000 estimated new deliveries, that would be a net of 24,000 cars removed from the total fleet.

Call PFL For All Your Railcar Storage Needs Today – We have spaces to offer you North America Wide 239-390-2885

If you are need of or have storage available or if you need maintenance, the cleaning of cars or are looking to reposition cars in a cost effective manner, call PFL today! We can trouble shoot your situation and work diligently to find a solution for you! 

If you are a leasing company and having cars being returned on lease call PFL today to secure a return on lease location.

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Railcars in Storage Decreased

As of October 1st, the total number of cars in storage continued the downtrend to 451,781 cars, representing a month-over-month decline of 24,791 cars or -5.2%. The number of cars in storage remains 88,141 cars (24.24%) higher than this time last year. Despite total cars in service decreasing slightly,  the percentage of the total fleet in storage declined to 27.12% from 28.57% last month; this is well below the July high of 31.55% of the total fleet in storage, but still higher than 21.71% of the total fleet in storage this time last year. Lastly, looking at pre-pandemic levels, we are still 57,931 cars (14.71%) higher than where we were on March 1^st. The chart of total cars in storage seems to be forming an upside-down “V” since the pandemic, please see below.

For the second consecutive month, every category we track saw a month-over-month decline in the number of cars in storage.  This furthers our thesis that things may be starting to normalize and, absent further disruptions, we should be on our way to better times for the rail industry. We do expect the downward trend will likely continue in the long run, but the pace could decelerate and may even stall in the short term.

Tanks, Covered Hoppers, and Gondolas in storage still remain the most elevated from pre-pandemic levels, with most other categories back around normal levels or below. These three categories represent the biggest portion of the total North American fleet, so we would also expect these categories to have the most cars stored as a percentage of total stored cars. However, while a majority of the declines in storage numbers over the last few months can be attributed to tanks and covered hoppers, the levels remain elevated because some of the products shipped in these cars have been the hardest hit by the pandemic.

Cars are Moving Back Into Service

PFL has started to see cars moving from storage back into service. The majority have been for industrial products in more cyclical industries or consumer products. This is another good sign that hopefully the broader economy should follow. Food and grain cars have also been hot, especially now that we are in the harvest season. Grain traffic has been relatively unaffected by the pandemic, with carloads actually increasing year over year each month. Grain alone accounted 21% of all US railcar traffic last month.

Demand Remains Depressed

With all that said, demand for railcars still remains depressed. We have seen some action picking back up in the leasing market which is encouraging, but we are still well below prepandemic activity. Lease prices remain below historical averages and a lot of larger companies we encounter are hesitant to make any longer-term commitments. Katie Farmer, BNSF’s incoming CEO has this to say about rail traffic last week, “We basically say that if we’re handling 200,000 units a week, that indicates we’re a busy railroad.” “In 2018, we handled over 200,000 units a week, 41 times that year. Fast forward to 2020 and with the impact of the pandemic, we haven’t hit 200,000 units on our railroads yet.” She continued, “In the depth of the pandemic, our rail loadings were actually down to about 150,000 units a week. Now, we have seen that continue to come back. And we anticipate this week we’ll handle somewhere in the neighborhood of mid 195,000-196,000 range,” she added.

DOT-111 Tank Cars and Small Cube Covered Hoppers

The most challenging areas of the rail fleet when it comes to storage will be the older DOT-111 tank cars, and smaller cube-covered hoppers. Full utilization of these fleets may never happen again as there is a significant glut of these cars in the market and a limited number of commodities that can be shipped in them. The industry is looking at retrofitting 111s when it makes sense, and is currently looking into repurposing or re-bodying the small cube-covered hoppers. While a lot still remains to be seen on the fate of these cars, we have talked in depth in previous reports about different legislative proposals to incentivize scrapping cars and achieve an equilibrium fleet utilization number.

If you are in need of railcars or have storage available or if you need maintenance, the cleaning of cars or are looking to reposition cars in a cost-effective manner, call PFL today! We can troubleshoot your situation and work diligently to find a solution for you! 

If you are a leasing company and have cars being returned on lease call PFL today to secure a return on lease location.

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Railcars in Storage

As of September 1^st, the total number of railcars in storage was 476,572, accelerating the downtrend for a month over month decline of 27,451 (-5.45%); still 128,972 (37.1%) higher than this time last year. At these levels this currently represents 28.57% of the total North American fleet in storage. This would be below the July high of 31.55%, but still well above historical averages. Looking at pre-pandemic levels, we are still 82,722 cars above (21%) where we were March 1,2020.

Things May be Starting to Normalize.

Every category we track saw month over month decreases of cars in storage. This is a good indication that things may be starting to normalize. The number of tanks and covered hoppers in storage still remains the most elevated from pre-pandemic levels, with most other categories back around normal levels. As we highlighted in our previous storage report, intermodal traffic continues to be strong and the number of intermodal cars in storage is at levels not seen since this time last year.

August was the fifth-best month for intermodal loadings ever

August’s intermodal loadings were the best since late 2018. It was also the fifth-best month for intermodal loadings ever in the U.S., according to AAR Senior Vice President John T. Gray.

“Despite the pandemic and the associated economic dislocations, an enormous amount of freight continues to move on railroads and other transportation modes. …Much of what’s inside the trailers and containers on an intermodal train ends up on the shelves of stores, or finds its way to consumers’ doors via e-commerce merchants. Railroads help ensure that consumers get what they want, when they want it…”

– John T Gray

Looking at the charts below storage it is clear that storage is on a downtrend.

Now May Be the Best Time to Scrap

PFL is seeing more and more inquires for scrapping every single day as the number of cars in storage remains high. PFL is capable of scrapping on a mobile basis. Last month’s storage report we mentioned the potential for a credit being discussed. There is a new bipartisan act that was introduced that would enable a tax credit for car owners looking to purchase or refurbish existing equipment that “will incentive safer, greener freight railcar manufacturing in the United States.”

If the new or refurbished equipment will improve capacity or reduce fuel consumption by at least 8%, the bill would give car owners a time limited 50% tax credit. This credit, in tandem with an incentive to scrap cars as mentioned last month, could lead towards big changes in modernizing the existing rail fleet. Stay tuned to PFL for more details.

If you are need of or have storage available or if you need maintenance, the cleaning of cars or are looking to reposition cars in a cost effective manner, call PFL today! We can trouble shoot your situation and work diligently to find a solution for you! 

If you are a leasing company and having cars being returned on lease call PFL today to secure a return on lease location.

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As of August 1^st, the total number of cars in storage is 504,043, representing a decline of 22,427 (-4.26%) month over month and an increase of 163,055 (47.8%) from this time last year.  This currently represents 30.21% of the total North American fleet in storage, a slight decline from last month’s 31.55% of the total fleet. The total number of stored cars still remains very elevated from pre-pandemic levels, with the total number of cars stored 28% higher than the March 1, 2020 levels.

Cars are starting to move again as every category we track, except covered hoppers, saw month-over-month storage declines. Covered hoppers now represent 34.1% of all of the cars in storage as sand cars continue to be a challenge for our industry. Vehicle cars, gondolas, and intermodal cars had the biggest percentage declines in the number of cars stored with Vehicle cars in storage now pretty much back in line with historical levels. Intermodal cars in storage broke their pre-pandemic uptrend with the number of intermodal cars in storage now at 13,502 (18.25% of the total fleet), a decline of 2,500 cars m/m that puts this category back to levels not seen since Feb 2020. Big increases in m/m intermodal traffic is also giving the total rail traffic numbers a boost. With the total North American volumes up 538,788 (29.95%) in July, intermodal traffic alone accounted for an increase of 291,027(54%). While U.S. weekly carload volumes continue to be significantly lower than a year ago, intermodal volume was only slightly lower in contrast.

As oil prices continue their move higher, all eyes will be on Canada and whether energy companies from the country reactivate some more of their idled crude fleet. The basis traded today around -$11.90, close to the levels needed for barrels to start moving by rail again. Q4 basis is trading around -$14.90. This may result in tank cars coming out of storage, with the consensus in the industry thinking this will happen in Q4 or early Q12021. Most energy companies are actually very risk averse, so we do not expect the ramp up to be swift or dramatic until we see some stability in prices and basis. It is more likely that this will ramp up slowly as we approach year end and head into the next year. Companies will want to be sure these prices levels are here to stay before they spend millions to ramp their programs back up. On this subject, we received news out of Bakken with the court’s ruling ETP will not have to immediately shut and drain the DAPL. We touched on this issue last month and indicated this could lead to more tank cars coming out of storage, but it seems as though the can has been kicked down the road once again. PFL did see some cars coming out as a contingency in case the pipeline was forced to shut down, but they may move back to storage as the ongoing legal battle continues.

In last month’s storage report we indicated we thought storage was peaking and it turns out that would appear to be the case.  However, we do expect that storage levels will continue to remain elevated as the economic recovery continues. As weekly rail volumes start to improve, the industry overall is looking for solutions to relieve the burden of its railcar supply glut. One significant solution would be a tax incentive for scrapping excess capacity. “We have an industry coalition that is promoting and working with Congress on a railcar act. It would be an incentive and future stimulus to scrap and take out the inefficient cars in the storage. That would be a very attractive program. We’ve got wide parties of support for that,” said Greenbrier President and CEO, Bill Furman during his company’s FYQ3 earnings call on July 10. Where the industry is really oversupplied is on the coal car and sand car side. These are two markets that historically accounted for huge rail volumes and large quantities of cars that are now dwindling down.  We believe car owners and the overall industry could really benefit from a program like this and PFL is here to help with any scrapping needs and has mobile crews available now.  Call PFL today at 239-390-2885 for more details on rail car scrapping.

If you are need of or have storage available or if you need maintenance, the cleaning of cars or are looking to reposition cars in a cost effective manner, call PFL today! We can trouble shoot your situation and work diligently to find a solution for you! 

If you are a leasing company and having cars being returned on lease call PFL today to secure a return on lease location.

Loaded hazmat storage in key market areas is still available, so please give PFL a call today.

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