New Rail Car Demand Fell in 2016

The downturn in railroad freight traffic in 2016 also had an adverse effect on the demand for railroad freight cars.

train image2A report by Economic Planning Associates found that deliveries of freight cars last year declined.

“After two consecutive years of strong growth, 2016 annual deliveries amounted to 62,433 cars and intermodal platforms, a 24.1 percent drop from the 82,296 units that were assembled in 2015,” noted EPA principle Peter Toja. “More significantly, orders last year amounted to only 22,684 rail cars, approximately 56 percent below the previous year. As a result, backlogs dropped from 111,000 at the beginning of 2016 to 66,700 units at the end of the year. Thus, car builders are beginning 2017 with backlogs that represent only 4.47 quarters of production at the current rate of assemblies.”

Toja, though, believes that demand growth for freight cars is on the horizon.

“We expect that stronger commodity growth trends over the forecast horizon will enhance traffic and profitability, leading once again to increased capital outlays, including the purchases of locomotives and rolling stock,” he said.

Toja expects demand for new rail cars in 2017 to rise from 41,000 cars to 43,000 cars. In the longer term, he projects rail car deliveries to increase from 46,300 in 2019 to 53,500 in 2021.

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