They look good, perform well and garner a lot of favorable publicity. But during a time when freight traffic is down, environmentally friendly locomotives are having a tough time finding buyers.
An analysis by Railway Age of Tier 4 compliant locomotives compared them with DOT-117 hazmat tank cars.
Both are well suited to achieve desirable goals, but those are not necessarily the most pressing or immediate goals of the railroad industry.
Tier 4 refers to emission standards set by the U.S. Environmental Protection Agency.
Although the railroad industry has embraced Tier 4, it doesn’t have enough Tier 4 compliant locomotives to pull its trains.
The railroad industry remains profitable and is outwardly optimistic about its future.
But month after month of reports from the Association of American Railroads show freight traffic in decline, particularly the coal business.
Some freight business has remained stable or achieved some growth, but that hasn’t been enough to offset the large losses resulting from falling coal traffic.
Those are not the conditions that are likely to lead to railroads wanting to buy new locomotives or tank cars.
Another falling commodity has been crude oil and the number of available tank cars exceeds the demand for them.
Likewise, Class 1 railroads have many locomotives in cold storage.
“Two years ago, every serviceable locomotive was reactivated,” said Oliver Wyman’s Jason Kuehn at Rail Equipment Finance 2016 in an interview with Railway Age. “Now, 15 percent or more of the road locomotive fleet is in storage. The price spread between natural gas and diesel has choked off interest in LNG and CNG-fueled locomotives. And Tier 4 emissions levels are so strict that they’ve halted the virtuous cycle supporting locomotive replacement. We’ve gone from the perfect storm to a dead calm in two short years.”
Railway Age reported that some locomotive builders and leasers are looking to the export market for business.
Progress Rail/EMD, GE Transportation, National Railway Equipment, MotivePower, Railserve, RJ Corman, Brookville Equipment, Knoxville Locomotive Works and Republic Locomotive are among the companies that have sent represents traveling to such places as China, India, Russia and South Africa in search of sales.
As a result of the soft U.S. market for locomotives, Railway Age said that you won’t find this year a builder offering something new and/or innovative.
Nonetheless, the companies are seeking to do what they can with what they have to serve what markets exist and to prepare for what they hope will be better times ahead.
That means tinkering with existing products and seeking to use technological advances to tweak them.