PFL Railcar Report 11-7-2022

“When someone tells me “no” it doesn’t mean I can’t do it, it simply means I can’t do it with them.” 

– Karen E. Quinones Miller

Jobs Update

• Initial jobless claims for the week ending October 29th, 2022 came in at 217,000,  down -1,000 people week-over-week.

• Continuing jobless claims came in at 1.484 million people, versus the adjusted number of 1.438 million people from the week prior, up +47,000 people week over week.

Stocks closed higher on Friday of last week, but down week over week

The DOW closed higher on Friday of last week, up 401.97 points (+1.26%), closing out the week at 34,403.22, up down -458.58 points week over week. The S&P 500 closed higher on Friday of last week, up 50.66 points (+1.36%), and closed out the week at 3,770.55, down -130.51 points week over week. The NASDAQ closed higher on Friday of last week, up 132.31 points (+1.19%), and closed the week at 10,475.25, down -627.2 points week over week.

In overnight trading, DOW futures traded higher and are expected to open at 32,582 this morning up +154 points.

Oil closed higher on Friday of last week and higher week over week

 WTI traded up +$4.44 per barrel (+5.04%) to close at $92.61 per barrel on Friday of last week, up $4.71 per barrel week over week. Brent traded up +US$3.90 per barrel (+4.12%) on Friday of last week to close at US$98.577 per barrel, up $2.80 per barrel week over week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.1 million barrels week over week. At 436.8 million barrels, U.S. crude oil inventories are 3% below the five-year average for this time of year.

Total motor gasoline inventories decreased by 1.3 million barrels week over week and are 6% below the five-year average for this time of year.

Distillate fuel inventories increased by 400,000 barrels week over week and are 19% below the five-year average for this time of year.

Propane/propylene inventories increased by 1.2 million barrels week over week and are 4% above the five-year average for this time of year.

Propane prices were up by 3 cents per gallon week over week, but down 52 cents per gallon year over year.

Overall, total commercial petroleum inventories decreased by 700,000 barrels week over week.

U.S. crude oil imports averaged 6.2 million barrels per day during the week ending on October 28th, 2022, an increase of 25 thousand barrels per day from the previous week. Over the past four weeks, crude oil imports averaged 6.1 million barrels per day, 0.5% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) averaged 286,000 barrels per day, and distillate fuel imports averaged 121,000 barrels per day during the week ending on October 28th, 2022.

U.S. crude oil refinery inputs averaged 15.8 million barrels per day during the week ending on October 28, 2022, which was 406,000 barrels per day more than the previous week’s average.

As of the writing of this report, WTI is poised to open at $92.42, down -$0.19 per barrel from Friday’s close.

North American Rail Traffic

Week Ending October 29th, 2022.

Total North American weekly rail volumes were up (+0.04%) in week 43 compared with the same week last year. Total carloads for the week ending on October 29th were 360,025, up (+1.78%) compared with the same week in 2021, while weekly intermodal volume was 338,904, down (-1.75%) compared to 2021. 6 of the AAR’s 11 major traffic categories posted year-over-year increases with the most significant decrease coming from Metallic Ores and Minerals (-14.8%). The largest increase was from Nonmetallic Minerals (+12.69%).

In the east, CSX’s total volumes were up (+4.03%), with the largest decrease coming from Grain (-23.48%) and the largest increase from Coal (+24.04%).  NS’s volumes were up (0.92%), with the largest decrease coming from Forest Products (-9.56%) and the largest increases from Grain (+21.17%).

In the West, BN’s total volumes were down (-3.17%), with the largest decreases coming from Metallic Ores and Minerals (-28.55%), as well as Other (-28.13%), and the largest increase coming from Motor Vehicles and Parts (+12.24%). UP’s total rail volumes were up (+5.87%) with the largest decrease coming from Other (-18.03%) and the largest increase coming from Nonmetallic Minerals (+28.53%).

In Canada, CN’s total rail volumes were down (-7.85%) with the largest decrease coming from Other  (-66.28%) and the largest increase coming from Petroleum and Petroleum Products (+29.62%). CP’s total rail volumes were up (1.16%) with the largest decrease coming from Intermodal (-32.89%) and the largest increase coming from Coal (+54.57%).

KCS’s total rail volumes were down (-0.59%) with the largest decrease coming from Other (-34.87%) and the largest increase coming from Nonmetallic Minerals (+10.82%).

Source Data: AAR – PFL Analytics

Rig Count

North American rig count was down by -1 rigs week over week. U.S. rig count was up by 2 rigs week-over-week and up by +220 rigs year over year. The U.S. currently has 770 active rigs. Canada’s rig count was down by -3 rigs week-over-week, and up by 49 rigs year-over-year. Canada’s overall rig count is 209 active rigs.  Overall, year over year, we are up +269 rigs collectively.

North American Rig Count Summary

A few things we are keeping an eye on

We are watching Petroleum Carloads

The four-week rolling average of petroleum carloads carried on the six largest North American railroads fell to 23,897 from 24,009, which was a loss of 112 railcars week-over-week.  The first week-over-week loss after 4 weeks of gains. Canadian volumes were up; CP’s shipments increased by +15.3% week over week, and CN’s volumes were up by +3.7% week over week. U.S. shipments were also mixed.  CSX had the largest percentage increase, up by +10.5%, and the UP had the largest percentage decrease and was down by -14.2%.

Some Key Economic Indicators

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 was down month over month at 50.2% in October. This is the lowest level since May of 2020. The new orders component of the PMI rose month over month, coming in at 49.2 from 47.1% in September.  Of the 18 manufacturing sectors tracked in the PMI, eight grew in October 2022.

Industrial Output and Capacity Utilization-Total U.S. industrial output rose a preliminary and seasonally adjusted 0.4% in September 2022 from August 2022, according to the Federal Reserve. In September 2022, it was 105.2, which is the highest month ever.

Manufacturing output was up a preliminary 0.4% in September, the third straight month-over-month gain. Manufacturing accounts for 75% of total output. At 102.8 in September, the manufacturing index was its highest since July 2008.

Manufacturing output would be even higher if automakers hadn’t been having severe supply chain problems this year, though those problems are reportedly beginning to dissipate. Production of motor vehicles and parts account directly for around 6.7% of U.S. manufacturing output, the Fed says, but its full contribution is higher if output from other industries that are inputs to auto making (steel, chemicals, etc) were fully included. According to the Fed, U.S. motor vehicle assemblies in September 2022 were an annualized 10.7 million, the most since November 2020.

Overall capacity utilization was a preliminary and seasonally adjusted 80.3% in September, technically its highest since March 2008, but not materially different than it’s been for several months. Manufacturing capacity utilization in September was a preliminary 80.0%, up from 79.7% in August 2022.

The Bureau of Labor Statistics reported on November 4th that a preliminary 261,000 net new jobs were created in October (higher than most economists expected), while job gains in September were revised upward from the 263,000 originally reported to 315,000.

 The official unemployment rate rose to 3.7% in October from 3.5% in September, due to an increase in those reporting as unemployed and a small decrease in the size of the labor force.

Taken together, it means the job market may have cooled a bit, but it’s certainly not cold, and it’s nothing like you’d expect (based on historical patterns) if we were already in, or about to enter, a recession.

Consumer confidence fell in October after 2 consecutive month over month increases. The Conference Board’s Index fell to 102.5, down from 107.8 in September.

The University of Michigan’s index of consumer sentiment rose, albeit slightly, up to 59.9  in October from 58.6 in September.

Total consumer spending not adjusted for inflation rose a preliminary 0.6% in September 2022 over August 2022. That’s the eighth straight month-to-month gain.

Spending on goods rose 0.3% in September from August.  Disposable income adjusted for inflation was flat in September from August 2022. Savings as a percentage of disposable personal income, a measure of consumer rainy day funds, fell to 3.1% in September, the lowest it’s been since 2008 and less than half what it was a year ago. Personal savings were a seasonally adjusted $582 billion in September 2022, 59% below from what it was one year ago.

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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 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 239-390-2885

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PFL is seeking:

• 8, 23.5 tanks CSX in the east for polyacryamide for 2 years plus
• 35, 5400-6300 Covered hoppers for lease off the BN needed in Iowa for 3-5 Years. 
• 5, 20K unlined tanks needed in Texas for 2 years BNSF – more needed by year end
• 100-200, 340W Pressure cars for a 12 month term for propane. Can take in various locations, needed ASAP
• 10 Propane cars needed in North Dakota for Winter Lease. Needed ASAP. 
• 50 6350 covered hoppers in the midwest with most class ones for up to 5 years for DDG
• Up to 40 5500 Covered Gons 286 unlined CSX/NS preferred but will consider other
• 4 Lined tanks for glycerin to run from Arkansas to Georgia 1-3 years
• 30 boxcars on UP or CP for 3 years to run from TX to Edmonton – negotiable
• 100, 2480 CU-FT Ag Gons needed in Texas off of the UP for 1-3 Years.
• Various Hoppers 286 GRL 4200-7000 CU FT in several locations negotiable
• 300 5800 Covered hoppers needed for plastic – 5-year lease – negotiable
• 50, 5800cuft or larger Covered Hopper for use in DDG needed in the Midwest for 3-4 years. Immediate need.
• 10-20 Covered hopper grain cars in the midwest 5200-5500 2-3 years
• 100 Moulton Sulfur cars for purchase – any location – negotiable
• 50 Ag Gons 2500-2800cuft 286k GRL in the east for 5 years negotiable
• 100 15K Tanks 286 for Molten Sulfur in the Northeast CSX/NS for 6 months negotiable
• 100, 5800 Covered Hoppers 286 can be West or East for Plastic 3-5 years
• 50, 6500+ cu-ft Mill Gon or Open Top Hopper for wood chips in the Southeast for 5 Years.
• 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.

PFL is offering:

• 20, CPC 1232s last in Gasoline. On the UP in Texas, Short term. 
• 50, 30K 117Js Last in Diesel.  Free move on the UP or BN. Can return Dirty
• 120, 30K 117Rs Last in Diesel.  Free move on the UP or BN. Can return Dirty
• 25 117Rs for sublease dirty to dirty service BN/UP – negotiable
• 25, 31.8K CPC 1232 last in Crude in New Mexico.  Dirty to Dirty. 
• 200 Clean C/I 25.5K 117J in Texas. Brand New Cars!
• 150 DOT 111s last in ethanol in the Midwest with free move.  
• Up to 500 sand cars for sale or lease at various locations and class ones – Great Price!
• 150 117R’s 31.8 clean for lease in Texas KCS – for sale or lease – negotiable
• 31.8K Tank Cars last in Diesel. Dirty to dirty in Texas
• 200 117Js 29K in the Midwest. Lined and brand new- lease negotiable
• 100 117Rs dirty last in Gasoline in Texas for lease Negotiable
• Various Hoppers for lease 263 and 268 multiple locations negotiable
• 300W pressure cars located in various locations. 
• 200 117Js 29K OK and TX Clean and brand new – Lined- lease negotiable
• 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.

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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 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.

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