Resignation and Recovery in the Rhetorical World of Rail Finance

By Pat Foran, editor

The wet blanket that is global economic uncertainty continues to prompt even the boldest of prognosticators to mothball their crystal balls. Rail-industry finance folks, too, aren’t comfortable looking all that far ahead these days. Like many of us, they tend to default to RhetoricalSpeak when asked to characterize the key issues they’re likely to face in 2009. Among the questions they raised during the information gathering for our ninth annual Finance & Leasing Guide:

• How low will freight-rail traffic — and, so, rail-car orders and leases — go in ’09? “A glut of available cars is driving down lease rates and there are no opportunities to build new equipment,” a lessor told us.
• Will shippers and railroads “overreact,” resulting in “drastic spending cuts?” as one lessor put it.
• To what extent will federal stimulus legislation enable rail to play a more immediate role in economic recovery?
• Will there be access to capital or will credit markets remain in a relative deep freeze? Where’s capital going to come from — and in what form? At what price?
• In this post-financial-market-bailout milieu, will railroads be subject to new regulatory pressure from the new Congress? If so, in what form ... and, again, at what price?
• Once we do get past this recessionary stretch, which, if any, rail sectors will return to pre-recession spending levels? Put another way: What kind of a game-changer is this recession, and what will the recovery — and the rail-finance segment — look like after we dig ourselves out from under it?

“If I knew the answer to that ...” said one equipment finance official, trailing off and, in so doing, summing up the sentiment of many in this elliptical phase we’re in. “Right now, for a lot of us, it’s ‘Put your head down and hope you don’t make a dent.’”

Regardless of where their heads are at, they’re also rolling up their sleeves and looking for meaningful ways to get to work. This, they’ve always known: This business is cyclical, at times wildly so, but isn’t down for the count. And they’re not just along for the ride.

“We won’t be asking, ‘Are we there yet?’ for awhile,” a finance exec said. “But we will.”

And the question won’t be the least bit rhetorical. Until then, though, it’ll be rough sledding, heavy slogging (or choose your own metaphor).