EPA trims 2017 rail-car deliveries estimate just a tad

Despite weaker carloadings in several major commodity groups, rail-car demand was relatively stable in the third quarter, according to Economic Planning Associates Inc.'s (EPA) latest "Outlook for Rail Cars" report.

After a strong start, rail traffic moderated in the quarter, primarily because of a significant slowing in grain exports, weak light vehicle production and a continued decline in petroleum loadings, the report states.

"We anticipate that continued strength in coal, aggregates, metallic and nonmetallic minerals, and primary metal products will offset the weakening environment of grain, motor vehicles and petroleum during the remainder of this year," EPA officials said. "We now look for 2.6 percent growth in commodity haulings this year and a stronger expansion of 2.9 percent in 2018."

In terms of the rail-car market, assemblies and backlogs held up well in the third quarter despite an easing of orders from the second quarter, the report states. At current production rates, the end-of-September backlog of 64,253 cars is estimated to represent 5.8 quarters of future assemblies.

Strength in orders for mid-sized and small-cube covered hoppers, intermodal equipment and Class F cars has been offset by modest weaknesses in demand for box cars, hi-cube covered hoppers and tank cars. As a result, the EPA has lowered its 2017 rail-car deliveries forecast from 43,250 to 42,500 units.

However, the organization raised its 2018 deliveries estimate from 45,500 to 46,250 units.

"Longer term, car deliveries will increase from 49,500 units in 2019 to 60,000 units in 2022," the EPA predicts.