Railcar Survey Shows Mixed Picture

A recent survey of rail equipment needs produced a mixed picture that showed shippers are not ordering railcars due to uncertainty and their order sizes have gotten smaller.

But Cowen and Company said that the survey also found that the railcar demand in the next 12 months should be a “net neutral.”

Cowen analyst Matt Elkott said that the survey considered four metrics:  The percentage of shippers who will or may order railcars, the conviction level about ordering (the split between “yes” and “maybe”) among this group, the percentage of “same shippers” (which compares only the responses of shippers who participated in both first and second quarter surveys who will or may order railcars, the conviction level about ordering.

“Shippers expect to place smaller orders relative to our prior [survey],” Elkott said. “Among the shippers who said they don’t plan to order railcars in the next 12 months, the percentage who said it is because they don’t have incremental equipment needs increased.”

About 55 percent of the shippers “will” or “may” order railcars in the next 12 months.

Of these, 59 percent said they plan to place orders while 41 percent said “maybe” they will order.

About 45 percent say they do not plan to order railcars, a drop of 1 percent compared to the prior-quarter survey.

On a same-shipper basis, Elkott said the results look less encouraging.

About 47 percent said they will or may order railcars, compared to 68 percent in the previous survey.

Of these, 75 percent said they plan to place orders while 25 percent said “maybe.”

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