“I find that the harder I work, the more luck I seem to have.”
– Thomas Jefferson
AAR Rail Time Indicators
Well folks as of July 1st, the total number of cars in storage was 526,450, an increase of 5,721 (10.86%) month over month and an increase of 197,560 (60.1%) year over year. This is the 2nd consecutive month of a record number of cars in storage now representing 31.55% of the total fleet. The total number of cars in storage has increased by more than 1/3rd since March 1st with every category except intermodal seeing double digit percentage gains over the same period.
The biggest decline of cars in storage were vehicle cars, which as we wrote in last month’s report accounted for one third of the cars added to storage in May. The gradual comeback of the auto industry is clear with almost 80% of those added cars moving again. However, 11,309 vehicle cars (17% of total fleet) still remain in storage which is well above historic levels. In addition, intermodal cars started to move back into service with around 12% (2,145 cars) of them leaving storage. Intermodal traffic remains down 6.6% year over year but the number of intermodal cars in storage has been on an uptrend for over a year pre-pandemic.
Most other categories still saw increases in the number of cars stored. Covered hoppers remain the highest number of cars in storage representing 32.29% of the total covered hopper fleet and 29.71% of all cars in storage. Refrigerator cars, mostly carrying food, farm products, and chemicals also increased slightly (8.77%) with now more than 42% of the total refer fleet in storage, nearly double historic averages. The number of tanks in storage has had one of the biggest categorical increases since March, growing 52% from pre-pandemic levels. In June alone, the number of tanks in storage increased by 10,595, now accounting for 35.7% of the total tank car fleet. The biggest contributing factor to this has been the decline in petroleum and chemical product traffic, with petroleum products down 27% year over year and chemicals down 13 year over year. By far the largest year over year decline has been in coal carloads, with May being their worst month in history. While that rebounded slightly this month with a 9.1% increase in coal traffic, the number of gondolas in storage continues to increase, driven in large part by this decline.
Railcar Storage
Storage continues to be active and the market for it has remained very fluid. Storage demand has definitely calmed down from late March/April levels but as you can see from the numbers we are still breaking records when it comes to the number of cars in storage. We believe this may be from a lag in the data of how the AAR classifies a car as being “in storage”. But PFL has yet to see a sharp reversal or large waves of cars coming back into service. In fact what we are noticing is more of a shift in the demand from shippers to lessors as cars are returned to the owners who don’t have markets for them. We have also seen a lot of regulatory pressure on the pipelines lately – namely the shutdown of and subsequent resumption of Enbridge’s line 5, and the shutdown of the DAPL yesterday. Continued regulatory pressure could lead to disruptions of the supply chains and ultimately result in tank cars coming back into service. This is not good news for US producers but could be a tail wind for crude by rail. Although the excess rail capacity may help in the short term it is not a long term solution that can replace pipes. Further regulatory issues may lead to increasing lower cost crude imports from foreign producers and have detrimental long term effects on the US oil and gas industry.
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.
North American Freight Cars in Storage by Major Car Type
Loaded hazmat storage in key market areas is still available, so please give PFL a call today.
Live Railcar Storage Availability
As a storage operator or a user of storage, PFL can help maximize you profitability. PFL offers turn-key solutions to operators and users alike. PFL Field Services LLC is preforming work inside many storage operations and short lines. PFL Field Services will clean railcars, service railcars cars and scrap cars on a mobile basis with a PFL Guarantee and has crews available ready to serve you today no matter where you are at in the country. We have acquired top rated, brand new equipment to service you the customers. PFL Field Services also offers inspection services from top rated qualified inspectors now full time at PFL. Call us today to book a time! Our goal is to provide a win/win scenario for all and we can handle virtually all of your railcar needs onsite at a storage facility. Saving a user empty moves to a shop. Not only is it more efficient saving time and money for the car owner or lessee and lessor but retains the short lines storage customer at the facility over the long term. PFL handles loaded storage, empty storage mobile railcar cleaning, blasting, mobile railcar repair and scrapping of all railcars at storage facilities across the country. If you are an operator and have cars onsite that your customers need to have work done let them know you can do it via PFL Field Services. We can assist on return on lease scenarios saving Lessor and Lessee thousands of dollars. Call the desk today 239-390-2885.