This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
November 2022
By Grace Renderman, Associate Editor
Many companies in the rail industry have experienced a surge in demand for their products and services as the world continues to heal from COVID-19, including rail-car repair firms.
Calls for mobile car repair services have gained traction and previously grounded tank cars are re-entering service as more customers seek government-mandated qualification services. Federal law requires all tank-car owners to qualify the cars at least once per decade, even if a car isn’t in service for a period of time.
There’s also been an uptick in the need for specialized equipment perhaps due to delayed investments, says Dan Mack, executive vice president of marketing, sales and corporate development at Northern Plains Rail Cos., one of two car repair firms contacted by Progressive Railroading.
“Companies [are] probably trying to catch up a little bit. Some of that might have been a hiatus during the uncertain time of the pandemic,” he says.
Northern Plains serves customers in the upper Midwest, with most of them based in the surrounding region and some in Canada, Mack says. The company offers a full portfolio of services, including freight-car service (especially for clients in the agriculture sector), tank-car qualification and mobile repairs.
Northern Plains operates three stationary repair shops and three mobile repair units, although the company aims to expand its mobile operations since that part of the business is growing the most, Mack says.
“Being able to provide mobile services to where the car is, rather than to bring the car [to the shop]. There are all kinds of economic benefits,” he says. “You have a quicker response to mechanical issues, and there’s time and money saved on the transit. We see that as a growth opportunity.”
Demand for interior and exterior maintenance is also picking up, says John Ward, senior VP of repair services at American Industrial Transport Inc. (AITX). Some of the company’s services include car cleaning, installation of interior linings and exterior paints, and car refurbishments, modifications and rebuilds.
AITX maintains 17 locations throughout the South and Midwest, as well as a repair facility in Sarnia, Ontario. The company is in “strategic growth mode” as it continues to expand not only its services and capabilities, but also its market reach, Ward says. The firm’s in the process of opening a new tank-car facility on a CN mainline in Brookhaven, Mississippi, which will be AITX’s first foray into the Magnolia State.
“[The facility is] one of the few certified tank-car facilities on the line from Chicago to the Gulf,” Ward says. “There are refineries and chemical companies in New Orleans, Baton Rouge, Mobile and Houston. That’s a strategic location.”
As they continue to work through a backlog of orders, Northern Plains and AITX plan to better connect with more Class Is, whose recent service reliability issues have stressed rail equipment markets.
“It’s no secret that there have been some service challenges,” Mack says. “We think railroads are going to figure it out, but it’s going to be a bit of time. That’ll keep fleets running at high capacity.”
The tight labor market is a factor, too, impacting the number of both skilled and unskilled workers, Mack adds. Plus, worker retention has been difficult.
On top of that, supply-chain shortages have affected AITX, Ward says. Delayed deliveries of components for internal coatings and linings makes it harder to complete orders on time and get cars out of the shop to make room for new ones, he says. Nonetheless, AITX has managed to improve turnaround times.
“There’s a number of reasons for that, even in spite of the fact that we’ve had supply issues,” Ward says. “We’ve been able to coordinate our work mixes with our customers, pre-order materials when we know that we’ve got a certain group of cars coming in, and add resources and inventory where we can.”
Looking ahead to 2023, Northern Plains and AITX expect demand to remain steady due to new investments in biofuels and other renewable fuels that will help strengthen the rail-car market. They also expect to advance capital expenditure projects that got passed over during the pandemic.
In addition, Northern Plains plans to apply for federal funding from the $1.2 trillion infrastructure bill signed into law last year, of which $66 billion is allocated to freight and passenger rail (although the majority of the funding will go to passenger-rail entities, such as Amtrak).
Northern Plains operates in a number of areas where certain businesses could benefit from the federal funding, such as short lines, Mack says.
“We expect that we’ll be a participant in some form in some of those programs that drive infrastructure growth and investment opportunities,” he says.
For AITX, the need for tank-car qualification services will continue to increase beyond 2023, Ward believes, with demand likely doubling over the next two to three years. That’s why the company is ramping up expansion projects in Indiana and Pennsylvania as part of what Ward characterizes as a “methodical expansion process,” and trying to better gauge customers’ needs.
“We talk to different customers routinely, and we do consider different options if they make sense for both the customer and ourselves,” Ward says. “[We’re] always open to expansion.”
Email questions or comments to grace.renderman@tradepress.com.
Related Topics: