Survey says: Lingering interest rate, rail equipment demand and political uncertainties color the year ahead   

By Pat Foran, Editor-in-Chief

Will this year be better than last year for the rail finance and leasing sector? Worse? The same? Why? 

It’s a question we pose every January to dozens of execs who work in that sector as part of the information gathering for Progressive Railroading’s annual Finance & Leasing Guide. The 2025 iteration was published in the February print edition.

Pretty much every year, responses steer clear of certainty and include some variation of the tried-and-mostly-true sentiment “we’re cautiously optimistic.”  

To an extent, cautious optimism holds sway in this year’s responses, as well.

One difference: There were responses on the more definitive sides of the sentiment spectrum due in large part to the new U.S. presidential administration.

Some finance and leasing expect 2025 will be better than 2024 from a business perspective, and some expect it to be worse.

Regardless, most of the execs we heard from believe President Trump and his administration will impact the year ahead, and many expect uncertainty (due also in part to lingering interest rate and rail equipment demand murkiness) to rule in various ways, business wise, for at least the near term. 

Here’s a sampling of the survey responses:
 

From a business perspective, will 2025 be better than 2024? Worse? The same or similar? Why?

Officials at American Industrial Transport Inc. (AITX): 2025 is shaping up to be a stronger year compared to 2024. Coal traffic is expected to rebound after a notably weak 2024, providing renewed opportunities in this segment. The agriculture sector remains steady following improvements in 2024, though we remain vigilant about potential tariff-related uncertainties. Industrial production has significant upside, driven by favorable policies in the chemicals and energy sectors, which will support demand for tank and covered hopper cars. 

While rail-car orders and backlogs are likely to remain at or below replacement levels, this environment will continue to favor lessors with high utilization rates and strong lease pricing. Our focus on anticipating customer needs and maintaining fleet flexibility positions us well to deliver value as the market evolves. 

Thomas Jackson, vice president of corporate marketing and general manager, The Greenbrier Cos.: The North American rail-car market is in a demand trough as a moderating domestic economy and political uncertainty weigh on new orders. This has led to the pausing of many capital projects and rail-car purchases until the uncertainty subsides. North American rail-car production for the industry continues slightly above replacement levels with elevated prices driving a value gap between new and used equipment lease pricing. We expect annual deliveries near 40,000 units through 2028. 

Joe Devoe, senior director, Helaba (Landesbank Hessen-Thüringen) New York Branch: From a financing perspective, I expect 2025 to be better. Interest rates coming down modestly will create financing and re-financing opportunities for those who have funding needs. Lease rates are robust, rail-car values are up. A more pro-business administration seems to have folks off the sideline and in the game. 

Officials at National Steel Car Ltd.: We anticipate increased order activity toward the middle and back half of 2025 due to increased demand. 

Jason Kuehn, vice president, Oliver Wyman: Oliver Wyman does not expect any major changes in rail-car leasing or finance in 2025 compared to 2024. The market has been remarkably stable for the past 4-5 years, and we expect this to continue. With the closure of most U.S. assembly plants and a shift in production to Mexico, the capacity for building new rail cars has been scaled back, such that the boom/bust cycles that characterized this business a decade ago would not be feasible. Non-intermodal, non-coal rail traffic is currently growing slowly, such that demand for new cars is primarily being driven by the replacement needs of the existing fleet. 

Gary Hunter, Railroad Industries Inc.: Business will most likely be worse due to the new administration that will negatively impact the industry. 

Michael Sussman, CEO, Strategic Rail Finance: The U.S. land and natural resources, i.e., its minerals, forests and water, are going to be bought up in increasing quantities under the Trump administration with no regard for the environmental impacts of such unplanned industrial development. 

Julie Mink, president, Tealinc LLC: From a business perspective, we are optimistic about the rail industry in 2025. Although potential tariffs, fluctuating interest rates and economic uncertainty can dampen (or delay) some demand from shippers for rail equipment, continued tightness in rail-car supply and steady demand for long-haul bulk shipments will support consistent lease renewals and normalize higher lease rates. If the broader economy sustains growth and shipper demand remains stable, we believe that the rail industry is positioned well for positive growth in 2025. New innovations in rail and creative thought partners have us excited for tremendous opportunities in the coming year. 

What is the key issue facing the rail finance/leasing sector in 2025? Why?

AITX officials: Interest rates remain a factor to monitor, but we see opportunities amidst the challenge. Higher rates have supported stronger lease pricing and more disciplined car building, benefiting the sector’s stability.

2025 also brings growth opportunities as railroads take modal share from other freight transport, driven by efficiency and sustainability. While political uncertainties, such as tariffs, could impact trade, our adaptability ensures we navigate these shifts effectively. 

As the freight shipper supply chain becomes more dynamic, workforce development is imperative to lead internal transformation and drive proactive solutions. By investing in training and operational excellence, we ensure our team delivers unmatched customer value while preparing the next generation of rail professionals. 

Greenbrier’s Jackson: Rail-car lease rates have stabilized at higher levels, as interest rates are not decreasing as quickly as was widely anticipated. Overall, leasing fundamentals are expected to remain solid in 2025 due to limited supply and builders maintaining disciplined production levels. 

Helaba’s Devoe: Tariff impact or threat of tariff impact on steel prices/rail values, general economic activity and rail-friendly freight. That uncertainty is mitigated by the general pro-business, invest in America trends, and as more investment comes from the infrastructure bill from the prior administration, this should help rail traffic increase — which will increase demand, rail-car values, lease rates and financing activity. 

National Steel Car officials: Tariff and trade uncertainty coupled with labor challenges will impact manufacturing demand in North America. Interest rates will drive decisions on capex projects and hesitation to make [final investment decisions] will delay project implementation. 

Oliver Wyman’s Kuehn: The shift of rail-car production to Mexico (and one existing plant in Canada) opens the risk of tariffs being applied to new rail-car production. These costs would be passed on to rail-car owners in the form of purchase costs and lease rates, further challenging rail cost-competitiveness and dampening rail carload’s growth potential. 

Railroad Industries’ Hunter: The key issue is the demand for equipment because the substantial decline in materials such as coal plus the amount of storage cars in the market. 

Strategic Rail Finance’s Sussman: Capital is being provided to the rail industry as standardized financial instruments and investments that can be offered in mass when what is needed are customized structures that address specific needs of local companies and communities.  

Tealinc’s Mink: Just like in 2024, the key issue facing the rail finance and leasing sector in 2025 will be dealing with a continued tight supply of rail cars and fluctuating interest rates. These factors will make it more expensive for leasing companies to build new railcars and grow their fleets, which in turn may increase lease rates for shippers. Leasing companies are going to have to get creative to grow their fleets, adjust where needed, and keep up with customer expectations.