More rail cars are being stored and fewer of them are being built.
Although that is partly the result of a move by Class 1 railroads toward the precision scheduled railroading operating model, lower traffic volumes are also playing a role.
About 408,000 rail freight cars are being stored in North America and railroad officials say a 5.1 percent decline in traffic in 2019 is one factor behind that.
Speaking to a Midwest shippers conference this week in suburban Chicago, Greenbrier Companies President and CEO Lorrie Tekorius said the outlook for new rail car construction in 2020 and beyond is down from earlier projections.
Carbuilders now are expected to produce around 38,200 units in 2020 and 35,825 units in 2021.
That compared with 50,803 units built in 2018 and 82,296 units built in 2015.
Most of the loss comes from cars being built to haul coal and intermodal as well as diminished boxcar production.
Tekorius said that as the average speed of trains increases so does the need for rail cars.
She said a 1 mile per hour change in overall velocity can affect 50,000 rail cars as fewer or more are needed to meet demands.
Last year rail velocity increased by 3.7 mph compared with 2018.
Tekorius said that some cars are being pulled from storage that are used to move crude oil, ethanol and propane, which is a sign of possible change in those markets.
Union Pacific President and CEO Lance Fritz spoke at the conference about diminished rail traffic, saying UP now sees about 6.8 freight cars per carload generated, which is a historic low.
He said PSR has brought a fundamental shift in rail car needs.
“For us, it’s probably going to be (around) forever,” he said, adding that intermodal cars could be driven lower because of how they are used.
“We’re all going to be storing cars,” Fritz said. “I’m storing UP cars now that we’re going to need a lot more business to bring out again and run.”