advertisement

---

Last year, rail-car orders rose about 60 percent to 70,600 units and car deliveries increased about 46 percent to 46,900 units compared with 2003. Car demand will remain strong through 2005 and into 2006, said Economic Planning Associates Inc. (EPA) officials in the company's quarterly "Outlook for Rail Cars" report released in late January.

However, escalating car prices — driven by rising raw material and component costs — could be a near-term damper to car demand.

Because orders far exceeded deliveries last year, the car backlog increased about 70 percent to 58,700 units between January 2004 and January 2005.

"Car builders should be able to work into this sizeable backlog at a faster pace this year as the jump in last year's fourth-quarter assemblies to 14,400 units indicates that there has been some expansion in component production capability and availability than was the case earlier in 2004," EPA officials said.

Builders will deliver about 59,000 cars both this year and in 2006, spurred by increasing coal, chemical, grain, lumber, metal product and aggregate rail traffic, EPA predicts. Demand will increase for centerbeam, tank and coal cars, high-cube covered hoppers and intermodal equipment. In addition, fleet owners will seek to replace steel coal, box and multi-level flat cars, and mid- and small-cube covered hoppers over the long term, EPA said.

After declining to 57,000 units in 2007 and 55,000 in 2008, car deliveries will steadily rise again to 60,000 units by 2010.

"The relatively steady level of projected deliveries during the next five years reflects our hope that backlogs will be managed in such a manner as to … avoid the boom-bust production cycles of the past," EPA officials said.