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November 2021
By Michael Popke
The coronavirus pandemic has affected every segment of the railroad industry, including rail-car repair operations. In the wake of economic challenges, staffing shortages and fluctuating rail traffic, some service provider shops have pivoted to meet customers' evolving needs.
"It is challenging to predict what customers will need each year, but easy to predict that those needs will vary and change," said American Industrial Transport Inc. (AITX) Vice President of Repair Services John Ward. "We build our expansions, processes and customer services planning for options and flexibility. This philosophy has been tested the last 18 months."
In the better news department, AITX — which also provides leasing and data services — acquired The Andersons Inc.'s rail-car leasing business in August.
To keep pace with customer demand, rail-car repair companies are opening new shops, expanding mobile repair operations and strengthening customer relationships.
"Repair requests are ranging from bad-order and car-damaged needs to lease return and, more recently, preparation for new leases," said Midwest Railcar Repair President David Smook. "Our business is being sourced from longstanding customer relationships and is trending upward."
It doesn't seem as if Northern Plains Rail Services registered a major dip in business, but that could be because of where the company is located regionally in the upper Great Plains and Midwest, said Brock Lautenschlager, the firm's director of sales and marketing.
"There have been some supply shortages on components for rail cars, although we've been able to work through those," he said.
In late 2020, Northern Plains opened the Grand Plains Rail Center, a rail-car servicing and repair shop in Grand Forks, North Dakota. Served by BNSF Railway Co., the site complements the company's Erskine, Minnesota, facility, which features a repair shop, an enclosed sandblasting building, a full-service paint shop, and a large inventory of parts and weatherproof materials.
"We expect rail-car repair demand to continue in the upper Midwest," Lautenschlager said. "We've started working on articulated intermodal cars at that shop, which is going well. It's also available for transload activities, rail-car storage and specialty switching."
In July, AITX announced a $24 million expansion of a repair facility in Brookhaven, Mississippi, that will enable the shop to provide a full range of services, including coatings and heavy repair work. The Mississippi Development Authority is helping to extend a rail spur. AITX also purchased a new storage facility in Clinton, Indiana, earlier this year.
"Heading into 2021, we saw clearly that the business was changing all over, [and] it was important to us to try and see around the curve and invest in operations that provide unparalleled customer value," Ward said. AITX and Northern Plains also have invested in their mobile repair networks.
"We're seeing increasing demand for mobile repair activities," Lautenschlager said. "It's been a nice growth area for us. Mobile repair can be quicker, which means less downtime for railroads, and customers also don't have to pay to move a car to and from our shop."
Financial and logistical challenges can prompt some railroads to defer car maintenance. That's another reason for the mobile-repair uptick, Ward believes.
"We have been able to partner with customers to customize mobile-service plans, so the risk of deferring full-service work could be mitigated with a suite of mobile options," he said.
Midwest Railcar Repair reports steady mobile repair work, too. But the company isn't anticipating mobile work to expand in 2022, Smook said.
While rail-car repair companies might have approached 2021 warily, they're cautiously optimistic about the year ahead.
"The biggest challenge for [Northern Plains], and I think for every industry, is hiring people," Lautenschlager says. "The workforce will continue to be tight as we go into 2022. We've been able to manage through it so far, but I think we'll have to do a little more work to find the right people."
And repair shops will need to find them because the work figures to keep coming — eventually.
"[The] dominant trend has been that our customers continue to shop cars in our network and keep their business moving. At the full-service facilities, we are not seeing much difference in the types of activity," said Ward.
That activity includes bad-order and coating projects, as well as tank-car requalification work — a segment Ward believes will continue to grow over the next several years.
Michael Popke is a Madison, Wisconsin-based freelance writer. Email comments or questions to prograil@tradepress.com.
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