EPA: Demand broadens for various rail-car types, but maintains downward trend

While freight-car orders have moderated after skyrocketing in the first quarter, demand has increased for car types other than tank cars in the second quarter, according to Economic Planning Associates Inc.'s (EPA) July 2013 Rail Car Overview.

During the second quarter, tank cars accounted for 46.8 percent of total orders, compared with 80.6 percent in the first quarter. Demand has picked up for box cars, mid-sized covered hoppers, small cube-covered hoppers and intermodal platforms. However, tank cars still comprise 83.2 percent of backlogs and the struggling economy might dampen future growth in other car types, the report states.

Tank car demand is expected to remain high for the forseeable future to accommodate the rapid expansion of oil production. Meanwhile, demand for box cars and grain cars is expected to stabilize, and demand for small cube covered hoppers and intermodal equipment is expected to rise, EPA predicts.

Declining industrial activity and auto production will affect demand for mill gondolas, steel coil cars, auto rack carriers and auto service box cars. Demand for coal cars is expected to be weak this year, too, before "showing signs of a modest improvement in 2014," according to the report. Coal car deliveries are expected to total 2,250 units this year, compared with 6,492 cars in 2012. In addition, last year's drought still is impacting grain car assemblies, which are expected to "moderate" this year before "resuming a growth trend beginning in 2014," EPA says.

Based on first-half assemblies and mid-year backlogs, EPA predicts deliveries of 52,500 rail cars this year, a 10.8 percent decrease compared with 2012. In 2014, deliveries are expected to rebound to 60,300. Beginning in 2015, EPA predicts annual rail-car assemblies will total between 64,300 and 65,500 cars and platforms.