EPA: Tank-car demand to help drive up 2015 deliveries to 85,500 units

Since rail-car builders ended 2014 with a record backlog of 142,837 units, they began 2015 with "formidable levels of cars" set to be assembled this year and in the foreseeable future, according to Economic Planning Associates Inc.'s (EPA) "February Rail Car Outlook" report. And because car demand continues to expand, deliveries likely will reach 85,500 cars and platforms this year, including 40,000 tank cars, EPA predicts.

"With the exception of coal cars, rail equipment demand is broad-based as both expanding traffic and replacement pressures lifted the need for a variety of car types," the report states. "And the railroads are providing significant support to equipment demand."

Demand for the "long neglected" box car has strengthened and orders for all types of covered hoppers have continued to expand, EPA officials said in the report.

"Demand for small-cube covered hoppers continues to astound us. Full-year 2014 orders amounted to 49,809 cars, far ahead of the annual assemblies of 13,402 units," they said. "As a result, car builders will open 2015 with unprecedented backlogs of 39,835 cars. Based on these backlogs and rising production schedules, we look for assemblies of 17,500 cars this year and 17,000 cars in 2016."

Demand for intermodal equipment continues to gain momentum, as well. Orders for articulated equipment increased in all four quarters last year and, despite a pickup in assemblies, backlogs at 2014's end rose to 12,251 units, almost 15 times the beginning year level of 825 platforms, the report states.

"Based on the gathering momentum in demand, we look for deliveries of 7,500 intermodal units this year and 10,000 units in 2016," EPA officials said.

Tank-car demand also continues to remain upbeat — fourth-quarter orders totaling 14,964 cars were the highest since first-quarter 2013, the report states. As a result, car builders are opening 2015 with backlogs of 57,625 units, setting the stage for another strong year in assemblies. EPA projects deliveries will reach 40,000 tank cars in 2015, then moderate to 32,000 units in 2016.

"Due to the rapid expansion in oil production and the lack of any significant pipeline additions, especially given the president’s recent veto of the Keystone XL Pipeline, rail will continue to benefit and we anticipate strong annual deliveries of oil service tank cars throughout the forecast horizon," EPA officials said.

Overall, car deliveries are expected to moderate the next several years after reaching 85,500 in 2015. EPA anticipates deliveries of 80,500 units in 2016, followed by 75,800 units in 2017.

"Deliveries will remain at the healthy annual level of some 75,000 cars through 2020," EPA officials said.