Rail-car utilization rates, deliveries continue to decline, Longbow Research says (3/18/2009)
3/18/2024Rail-car utilization rates have declined to 93 percent this month as lessors struggle to renew leases, according to Longbow Research’s March survey of freight-car lessors.
As many as 500,000 cars currently are in storage and lease rates are down an average of 21 percent year over year, the survey shows.
Half of the respondents reported stable lease rates on a month-over-month basis while one-quarter reported declines of more than 10 percent and the remaining one-quarter noted negligible decreases between zero and 5 percent.
“We understand any cars on lease to the railroads that expired in recent months largely came back for the most part to the lessors,” Longbow Research analysts said in a survey summary. “Renewal among shippers was better in tank and coal-carrying cars.”
New car prices remain “largely inflated relative to lease rates,” so 60 percent of the respondents currently are looking for portfolios of used cars while only 7 percent are interested in purchasing new cars, the survey shows. The remaining 33 percent said that they have no plans to purchase any equipment.
“With so many used cars in the market, lessors will likely deploy any available capital on used rail cars,” Longbow Research analysts said. “We do expect a disproportionate amount of order activity focused on coal-carrying cars.”
Longbow Research also downwardly adjusted its car delivery forecast for 2009 and 2010, and now expects car builders to deliver slightly fewer than 24,000 units in 2009 and 16,750 units in 2010.
Source: Progressive Railroading Daily News