PFL Railcar Report 3-23-2020

“You may have to fight a battle more than once to win it”

Margaret Thatcher

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COVID-19 Update

Folks, as most of you know, there is a  battle going on out there amid the COVID -19 outbreak, as it continues to create havoc across the world.  Things seem to go from bad to worse as lockdowns across the nation intensifies and people are forced to work from home.  Millions of people have either lost their jobs this past week or will. 

Gold is not even a safe haven, as that too has declined with equities. This is uncommon considering gold prices typically rise when stock prices decline .  (Please see 5 year chart – blue line is the DOW)

Oil Futures in New York tumbled on Friday, bringing last week’s plunge to 29 percent, the biggest since January 1991. Some see demand shrinking as much as 10 to 20 million barrels of oil per day as drivers stay home and flights are grounded across the world.

Oil prices have fallen for four straight weeks and have dropped about 60 percent since the start of the year.  Prices of everything from coal to copper have also been hit by the crisis, while markets in bonds and stocks enter rarely charted territory. As of writing this report equities are poised to open higher with DOW futures currently up 450 points. 

We have been extremely busy at PFL with return on lease programs, storage and an unprecedented number of subleases and leases – please call PFL today 239-390-2885.

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Railcar Volumes

Total North American rail volumes were down 6.4% year over year in week 11 (U.S. -7.6%, Canada -2.6%, Mexico -6.7%), resulting in quarter to date volumes that are down 5.3% (U.S. -7.0%, Canada -1.6%, Mexico +4.2%). 5 of the AAR’s 11 major traffic categories posted year over year declines with the largest decreases coming from intermodal (-9.8%), coal (-20.2%) and nonmetallic minerals (-6.0%). The largest increases came from farm products & food (+10.1%), petroleum (+10.9%), motor vehicles & parts (+6.6%) and chemicals (+3.7%).

In the East, CSX’s total volumes were down 5.4%, with the largest decreases coming from coal (-27.6%) and intermodal (-4.7%). NS’s total volumes were down 17.4%, with the largest decreases coming from intermodal (-15.8%), coal (-45.9%), stone sand & gravel (-32.0%) and grain (-27.9%).

In the West, BN’s total volumes were down 6.3%, with the largest decreases coming from intermodal (-10.9%), coal (-15.2%), stone sand & gravel (-32.0%) and petroleum (11.7%) The largest increases came from grain (+21.0%) and motor vehicles & parts (+28.9%). UP’s total volumes were down 0.5%, with the largest decreases coming from intermodal (-4.3%) and coal (-13.1%). The largest increases came from chemicals (+9.7%) and petroleum (+21.6%).

In Canada, CN’s total volumes were down 7.6% with the largest decrease coming from intermodal (-18.5%). The largest increase came from farm products (+39.8%). RTMs were up 3.7%. CP’s total volumes were up 9.6%, with the largest increases coming from petroleum (+56.9%) and farm products (+129.8%). RTMs were up 12.8%.

KCS’s total volumes were down 0.5%, with the largest decreases coming from intermodal (-4.8%) and coal (-36.6%). The largest increase came from petroleum (+58.4%).

Reductions in Rail Volume

The Surface Transportation Board (STB) has released February headcount data for the U.S. rails. For the industry as a whole, February headcount was down 12.5% year over year. The most substantial year over year declines occurred at NSC and UNP. We are not surprised to see additional reductions given the weakness in rail volumes and PSR implementation. We expect further headcount reductions to continue as the rails assess the impact from COVID-19 and the sudden and drastic implosion of energy markets due significant demand destruction.

North American Rig count is down 97 rigs week over week with the U.S. losing 20 rigs and Canada losing 77 rigs week over week.  Year over year we are down 237 Rigs collectively.  U.S. energy firms cut the most oil rigs in a week in almost a year — mostly in the Permian basin — as a meltdown in oil and natural gas prices due to the coronavirus outbreak has forced producers to deepen cuts in spending on new drilling.

North American Rig Count Summary

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Railcar Markets

PFL is offering: 340Ws for long and short term lease, 117Rs last in diesel service, various box cars for lease, 31.8’s clean and last in refined products, 25.5K 117Js coiled and insulated, as well as 5000 CFC Center Flow Pressureaide Covered Hopper cars that have recently been cleaned. Call PFL for details today!

PFL is seeking: 23.5Ks and 25.5Ks for fuel oil products, 117s with magnetic gauging devices for lease, 117s dirty with condensate, 89 ft flat cars for purchase, 100 mil gons for short term lease, 117Js last in ethanol, and 4750s for use in coke service.

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Live Railcar Markets