Posted on by Curtis Chandler Posted in Railcar Report

“Contradictory little pieces of truth are a fact of life. But when we are willing to embrace and piece them together, we instantly discern them as different perspectives of the same enduring wisdom.”

― Tunde Salami

Jobs Update

  • Initial jobless claims for the week ending October 28th, 2023 came in at 217,000, up 5,000 people week-over-week.
  • Continuing jobless claims came in at 1.818 million people, versus the adjusted number of 1.783 million people from the week prior, up 35,000 people week-over-week.

Stocks closed higher on Friday of last week and up week over week

The DOW closed higher on Friday of last week, up 224.24 points (+0.66%), closing out the week at 34,061.31, up 1,643.73 points week-over-week. The S&P 500 closed higher on Friday of last week, up 40.56 points (+0.94%), and closed out the week at 4,358.34, up 240.97 points week-over-week. The NASDAQ closed higher on Friday of last week, up 184.09 points (+1.46%), and closed the week at 13,478.28, up 835.27 points week-over-week.

In overnight trading, DOW futures traded higher and are expected to open at 34,165 this morning up 28 points.

Crude oil closed lower on Friday of last week and lower week over week

WTI traded down -$1.95 per barrel (-2.4%) to close at $80.51 per barrel on Friday of last week, down -$5.03 per barrel week-over-week. Brent traded down US$1.96 per barrel (-2.3%) on Friday of last week, to close at US$84.89 per barrel, down -US$5.59 per barrel week-over-week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 800,000 barrels week-over-week. At 421.9 million barrels, U.S. crude oil inventories are 5% below the five-year average for this time of year.

Total motor gasoline inventories increased by 100,000 barrels week-over-week and are 2% above the five-year average for this time of year.

Distillate fuel inventories decreased by 800,000 barrels week-over-week and are 12% below the five-year average for this time of year.

Propane/propylene inventories decreased by 1.2 million barrels week-over-week and are 16% above the five-year average for this time of year.

Propane prices closed at 65 cents per gallon, down 1 cent per gallon week-over-week, and down -21 cents per gallon year-over-year.

Overall, total commercial petroleum inventories decreased by 3.1 million barrels during the week ending October 27, 2023.

U.S. crude oil imports averaged 6.4 million barrels per day during the week ending October 27, 2023, an increase of 412,000 barrels per day week-over-week. Over the past four weeks, crude oil imports averaged 6.2 million barrels per day, 1.4% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) averaged 557,000 barrels per day, and distillate fuel imports averaged 71,000 barrels per day during the week ending October 27, 2023.

U.S. crude oil exports averaged 4.897 million barrels per day for the week ending October 27th, an increase of 64,000 barrels per day week-over-week. Over the past four weeks, crude oil exports averaged 4.525 million barrels per day.

U.S. crude oil refinery inputs averaged 15.3 million barrels per day during the week ending October 27, 2023, which was 62,000 barrels per day more week-over-week.

WTI is poised to open at $82.06, up  $1.55 per barrel from Friday’s close.

North American Rail Traffic

Week Ending November 1st, 2023.

Total North American weekly rail volumes were down (-1.03%) in week 43, compared with the same week last year. Total carloads for the week ending on November 1st, 2023 were 354,915, down (-1.42%) compared with the same week in 2022, while weekly intermodal volume was 336,848, down (-0.61%) compared to the same week in 2022. 6 of the AAR’s 11 major traffic categories posted year-over-year decreases with the most significant decrease coming from Coal (-7.5%). The largest increase came from Petroleum and Petroleum Products (+10.01%).

In the East, CSX’s total volumes were down (-1.13%), with the largest decrease coming from Motor Vehicles and Parts (-3.13%) and the largest increase from Grain (+43.9%). NS’s volumes were up (+1.02%), with the largest decrease coming from Nonmetallic Minerals (-11.82%) and the largest increase from Forest Products (+7.17%).

In the West, BN’s total volumes were down (-4.04%), with the largest decrease coming from Coal (-4.04%), and the largest increase coming from Other (+24.77%). UP’s total rail volumes were up (+1.88%) with the largest decrease coming from Motor Vehicles and Parts (-12.83%) and the largest increase coming from Petroleum and Petroleum products (+48.72%).

In Canada, CN’s total rail volumes were down (-3.64%) with the largest increase coming from Other (+268.18%) and the largest decrease coming from Grain (-21.66%). CP’s total rail volumes were up (+5.78%) with the largest decrease coming from Coal (-20.28%) and the largest increase coming from Motor Vehicles and Parts (+67.4%).

KCS’s total rail volumes were down (-5.05%) with the largest decrease coming from Intermodal (-21.66%) and the largest increase coming from Coal (+46.74%).

Source Data: AAR – PFL Analytics

Rig Count

North American rig count was down by -7 rigs week-over-week. U.S. rig count was down by -7 rigs week-over-week and down by –152 rigs year-over-year. The U.S. currently has 618 active rigs. Canada’s rig count was flat week-over-week but down by -13 rigs year over year.  Canada’s overall rig count is 196 active rigs.  Overall, year-over-year, we are down -165 rigs collectively.

International rig count, which is reported monthly, was up by +22 rigs month-over-month and up +51 rigs year-over-year. Internationally there are 962 active rigs.

North American Rig Count Summary

A few things we are watching:

We are watching Petroleum Carloads

The four-week rolling average of petroleum carloads carried on the six largest North American railroads rose to 28,226 from 28,005, which was a gain of +221 rail cars week-over-week.  Folks, this is the ninth consecutive week-over-week increase! Canadian volumes were mixed. CPKC’s shipments decreased by -4.8% week over week, and CN’s volumes were higher by +3.7% week-over-week. U.S. shipments were mostly higher. The BN was the sole decliner and was down by -2.5% week-over-week.  The NS had the largest percentage increase and was up by 9.5%

We are watching Crude by Rail out of Canada

The Canadian Energy Regulator (“CER”) updated its monthly crude by rail numbers on October 27, 2023. For August 2023, Canada exported 148,651 barrels per day by rail (up by +34,867 barrels per day month over month) and continues to move higher.  This is now the third consecutive month-over-month increase and its highest reading since August of 2022.

We were expecting to see volumes increase as we headed into the month of August, as the weather continued to be warm and producers continued to build inventory. Basis numbers continue to look very favorable as Transmountain continues to get delayed. One Exchange’s Western Canadian Select Contract (WCS) settled on Friday of last week at US$28.10 per barrel below the WTI-CMA. (“West Texas Intermediate – Calendar Month Average”) The implied value was US$52.00 per barrel.  On Thursday, it settled at US$27.25 per barrel below the WTI-CMA for October delivery. The implied value was US$54.75 per barrel.  Trans Mountain is now expected to come on in Q1 2024.

We are watching The Mountain Valley Pipeline

Natural Gas pipeline company backed by EQT-Equitrans Midstream, remains on track to complete the Mountain Valley natural gas pipeline from West Virginia to Virginia in the first quarter of 2024 at an estimated cost of $7.2 billion, they said on Tuesday of last week. That is the same timeline and cost that the company reported in mid-October, which was a revision from a prior completion estimate of the end of 2023 and a cost of around $6.6 billion.

Mountain Valley Pipeline

Source: MVP – PFL Analytics

We are Watching Some Key Economic Indicators

Purchasing Managers Index (PMI)

The Institute for Supply Management releases two PMI reports – one covering manufacturing and the other covering services. These reports are based on surveys of supply managers across the country and track changes in business activity. A reading above 50% on the index indicates expansion, while a reading below 50% signifies contraction, with a faster pace of change the farther the reading is from 50. In October, the PMI decreased to 46.7 from September 49%, marking the twelfth consecutive month of readings below 50% and a 2.3% decrease month over month. Meanwhile, the new order subindex fell 3.7 percentage points from 49.2% in September to 45.5% in October.

Industrial Output & Capacity Utilization

The Federal Reserve reported that total U.S. industrial output rose a preliminary 0.3% in September 2023 over August 2023.   September’s increase brought total industrial production to its highest level since December 2018. For manufacturing output, which is about 75% of total output, September was up a preliminary 0.4% from August, matching the biggest month-to-month gain in five months. However, manufacturing output in September 2023 was still down 0.8% from September 2022, the seventh straight month with negative year-over-year output.

The overall industrial capacity utilization rate — which measures how much “slack” is available in the industrial economy — was a preliminary 79.7% in September, about where it’s been for the past nine months. For manufacturing, capacity utilization in September was a preliminary 77.8%; for the past few months, it’s been a bit lower than it was in the first part of 2023.

U.S. Unemployment Rate

According to the Bureau of Labor Statistics (BLS), a preliminary 150,000 net new jobs were created in October 2023. That’s half the 297,000 created in September and not far from the 165,000 created in August. The August and September numbers were revisions (in both cases, down 62,000) from the corresponding figures released last month. October jobs data included a decline of 33,000 auto manufacturing jobs, reflecting the impact of the UAW strike that has now been settled. The official overall unemployment rate rose to 3.9% in October from 3.8% in August and September.

Consumer Confidence

The Conference Board’s Index of Consumer Confidence decreased in October to 102.6 down from a revised 104.3 in September and well below its recent peak of 114.0 in July. It’s now the lowest it’s been in 2023.  Consumers continued to be preoccupied with rising prices in general and for grocery and gasoline prices in particular. Consumers also expressed concerns about the political situation and higher interest rates. Worries around war/conflicts also rose, amid the recent turmoil in the Middle East. The University of Michigan’s index of consumer sentiment fell from 67.9 in September to 63.8 in October.  We expect a continued erosion of consumer sentiment unless things change really fast.

Consumer Spending

Without being adjusted for inflation, total U.S. consumer spending rose a preliminary 0.7% in September over August, the third month-over-month increase so far this year. Spending on goods rose a preliminary 0.7% in September, matching August. Spending on services rose 0.8% in September, up from a 0.3% increase in August. After accounting for inflation, total spending grew 0.4% in September, up from 0.1% in August and slightly above the average so far this year.

The increase in consumer spending comes despite rising interest rates (including on credit cards),  high inflation, and a resumption in student loan payments for millions of Americans.

Consumer spending grew 4.0% in Q3 2023 over Q2 2022 and accounted for 2.7 of the 4.9 percentage points gain in Q3 GDP.

What is troubling is personal savings as a percentage of disposable income fell from 4.0% in August to 3.4% in September. That’s half the 6.8% average from 2018 to 2019, before the pandemic. Savings represent a rainy day fund. At some point, consumers could decide it’s going to rain soon and they should save more, which would make it harder for them to maintain current spending levels.  We expect to see a slowdown in spending, which fundamentally has to happen in our opinion.

GDP

The U.S. economy grew an inflation-adjusted 4.9% in Q3 2023 over Q2 2023, according to preliminary data released by the Bureau of Economic Analysis on October 26. That’s the best quarterly GDP growth rate since Q4 2021.

Consumer spending is about 70% of GDP. It grew 4.0% in Q3 (up from 0.8% in Q2) and was responsible for 2.7 of the 4.9 percentage points gain in Q3. Spending has been holding up well because of a strong job market and associated wage gains; slower inflation; and pandemic-related savings that haven’t yet been fully depleted.

Growing inventory levels and government spending added 1.3 and 0.8 percentage points, respectively, to Q3 growth. New home sales contributed 0.2 percentage points, its first positive contribution in the past 10 quarters. A low supply of existing homes for sale has helped spur new home construction.

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 troubleshoot 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 at 239-390-2885

Lease Bids

  • 25, 3230 PD Hoppers needed off of NS or CSX in Ohio for 5 Years. Cars are needed for use in Flyash service.
  • 20, 30K 117R or 117J Tanks needed off of UP or BN in Midwest for 6 Months. Cars are needed for use in Ethanol service.
  • 150, 29.2K 117R, 117J, DOT 111 Tanks needed off of CN or CP in Sarnia for 1 Year. Cars are needed for use in Fuel Oil service.
  • 50, 23.5-25.5 Dot 111 Tanks needed off of Any Class 1 in USA for 5 Years. Cars are needed for use in Asphalt service.
  • 3, 23.5-25.5 Any Tanks needed off of Any Class 1 in Port Allen, LA for 90 Days. Cars are needed for use in Fuel Oil service.
  • 3, 23.5-25.5 Any Tanks needed off of Any Class 1 in Natchez, MS for 90 Days. Cars are needed for use in Fuel Oil service.
  • 100, 30K Any Tanks needed off of Any Class 1 in Chicago for December 23-May 24. Cars are needed for use in Gasoline service.
  • 10, 2500CF Open Top Hoppers needed off of UP or BN in Texas for 5 Years. Cars are needed for use in aggregate service. Need Rapid Discharge Doors
  • 108, 28.3K Any Tanks needed off of CN in Canada for 1-3 Years. Cars are needed for use in Crude service.
  • 20-25, 30 or 31.8K Tanks needed off of in Texas for 1-5 Years. Cars are needed for use in VGO service. NC/NI
  • 3, 30 or 31.8K Tanks needed off of in Texas for 1-5 Years. Cars are needed for use in Naphtha service. NC/NI
  • 10-20, 30 or 31.8K Tanks needed off of in Texas for 1-2 Years. Cars are needed for use in Diesel service. NC/NI
  • 1, 30 or 31.8K Tanks needed off of in Texas for 6-12 Months. Cars are needed for use in Mono-Propylene Glycol service. NC/NI
  • 30-100, 31.8K CPC 1232 Tanks needed off of UP or BN in Texas for Purchase or Lease. Cars are needed for use in refined product services.
  • 15, 30K 117 Tanks needed off of NS in SouthEast for 1 Year. Cars are needed for use in Diesel service.
  • 25, 33K 340W Pressure Tanks needed off of UP or BN in Midwest for Oct-March. Cars are needed for use in Propane service.
  • 20-25, 30K 117 Tanks needed off of UP or BN in Illinois for 5 Years. Cars are needed for use in Ethanol service.
  • 100, 28.3K Any Tanks needed off of UP or BN in Midwest/Texas for 5 Years. Cars are needed for use in Veg Oils / Biodiesel service. Need to be Unlined
  • 25-50, 33K 400W Pressure Tanks needed off of CN or CP in Canada for Short Term. Cars are needed for use in Propylene service.
  • 50-100, 4550 Covered Hoppers needed off of UP or BN in Texas for 5 Years. Cars are needed for use in Grain service.
  • 10, 33K 340W Pressure Tanks needed off of CN in LA for 1 Year. Cars are needed for use in Butane service.
  • 25, 20.5K CPC1232 or 117J Tanks needed off of BNSF or UP in the west for 3-5 Years. Cars are needed for use in Magnesium chloride service. SDS onhand
  • 25-50, 25.5K 117J Tanks needed off of NS CSX in NorthEast for 5 Years. Cars are needed for use in Asphalt / Heavy Fuel Oil service.
  • 30-50, 33K 340W Pressure Tanks needed off of any class 1 in any location for 6-12 Months. Cars are needed for use in Propane service.
  • 15, 28.3K 117J Tanks needed off of any class 1 in any location for 3 years. Cars are needed for use in Glycerin & Palm Oil service.
  • 30, 17K-20K 117J Tanks needed off of UP or BN in Midwest/West Coast for 3-5 Years. Cars are needed for use in Caustic service.
  • 10, 286K 15.7K Tanks needed off of KCS in Texas for 1 Year. Cars are needed for use in Sulfuric Acid service. Needed next few months
  • 150, 23.5K DOT 111 Tanks needed off of any class 1 in LA for 2-3 Years. Cars are needed for use in Fluid service. Needed July
  • 25-50, 32K 340W Pressure Tanks needed off of NS or CSX in Marcellus for 1-2 Years. Cars are needed for use in Propane service.
  • 25-50, 30K DOT 111, 117, CPC 1232 Tanks needed off of CN or CP in WI, Sarnia for 1-2 Years. Cars are needed for use in Diesel service.
  • 10, 5200cf PD Hoppers needed off of UP in Colorado for 1-3 years. Cars are needed for use in Silica service. Call for details
  • 30-40, 286K DOT 113 Tanks needed off of CN or CP/ UP in Canada/MM for 5 Years. Cars are needed for use in CO2 service. Q1
  • 30, 30K DOT 111 Tanks needed off of UP in Texas for 1-3 Years. Cars are needed for use in Diesel service.
  • 25-50, 5000CF-5100CF Lined Hoppers needed off of BNSF, CSX, KCS, UP in Gulf LA for 3-10 years. Cars are needed for use in Dry sugar service. 3 bay gravity dump
  • 10, any capacity Stainless Steel Tanks needed off of any class 1 in Canada for 5-10 years. Cars are needed for use in Alcohol service.
  • Up to 60, 5150cf Covered Hoppers needed off of CN, CSX, NS in the east or midwest for 3 years. Cars are needed for use in Fertilizer service. 3-4 hatch gravity dumps

Sales Bids

  • 100-150, 3400CF Covered Hoppers needed off of UP BN in Texas. Cars are needed for use in Sand service.
  • 8, 5200 Covered Hoppers needed off of various class 1s in various locations. Cars are needed for use in Plastic Pellet service.
  • 20, 17K DOT 111 Tanks needed off of various class 1s in various locations. Cars are needed for use in corn syrup service.
  • 20-30, 3000 – 3300 PDs Hoppers needed off of BN or UP preferred in West. Cars are needed for use in Cement service. C612
  • 10, 2770 Mill Gondolas needed off of any class 1 in St. Louis. Cars are needed for use in Cement service.
  • 20, 2770-3400 Mill Gondolas needed off of any class 1 in South Texas. Cars are needed for use in scrap metal service.
  • 100, 15.7K DOT 111 Tanks needed off of CSX or NS in the east. Cars are needed for use in Molten Sulfur service.
  • 30, 17K-20K DOT 111 Tanks needed off of UP or BN in Texas. Cars are needed for use in UAN service.
  • 20, 2770 Mill Gondolas needed off of CSX in the northeast. Cars are needed for use in non-haz soil service. 52-60 ft
  • 10, 4000 Open Hoppers needed off of CSX in the northeast. Cars are needed for use in scrap metal service. Open top hopper
  • 10, 6400 Open Hoppers needed off of CSX in the northeast. Cars are needed for use in wood chip service. Open top hopper, flat bottom
  • 20-25, 25.5K 117, DOT-111, CPC 1232 Tanks needed off of UP or BN in Texas. Cars are needed for use in Veg Oil service. Coiled and insulated
  • 15, 30K 117, DOT-111, CPC 1232 Tanks needed off of UP or BN in Texas. Cars are needed for use in Veg Oil service.
  • 45, 3000 cf PD Hoppers needed off of any class 1 in Texas. Negotiable
  • 1-2, Any DOT 111, 117, CPC 1232 Tanks needed off of any class 1 in Texas. Coiled and Insulated
  • 2-4, 28K DOT 111 Tanks needed off of BNSF Preferred in Minnesota. Cars are needed for use in Biodiesel service. Coiled and insulated
  • 100, Plate F Boxcars needed off of BN or UP in Texas.
  • 200+, 5000cf Covered Hoppers needed off of any class 1 in various locations.
  • 5, 3400CF Closed Hoppers needed off of any class 1 in Ohio. Cars are needed for use in Sand service.

Lease Offers

  • 10, 28.3K, 117R Tanks located off of All Class Ones in St Louis. Cars are clean Call 239-390-2885 for more information
  • 75, 29.2K, DOT 111 Tanks located off of BN, CP in Moving In Midwest. Cars were last used in Bio. Free Move
  • 30, 31.8K, CPC 1232 Tanks located off of UP, BN in Texas. Cars were last used in Diesel. Call 239-390-2885 for more information
  • 25, 25.5K, DOT 111 Tanks located off of UP in Texas. Cars were last used in Heavy Fuel Oil. Call 239-390-2885 for more information

Sales Offers

  • 100-200, 31.8K, CPC 1232 Tanks located off of BN in Chicago. Dirty/Clean
  • 100, 28.3K, 117J Tanks located off of various class 1s in multiple locations.

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 at 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 scrapping 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.

PFL IS READY TO CLEAN CARS TODAY ON A MOBILE BASIS WE ARE CURRENTLY IN EAST TEXAS

Live Railcar Markets

Lease Offers
Lease Bids
Sales Offers
Sales Bids
CAT Type Capacity GRL QTY LOC Class Prev. Use Clean Offer Note