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Agricultural exports are rising, ethanol production is accelerating, housing markets are improving, light vehicle sales are expanding and manufacturing activities are picking up, prompting more rail carloads of grain, ethanol and distiller grains, lumber, motor vehicles and parts, metals chemicals, plastics and coal. In addition, intermodal traffic is ramping up.
 
The ongoing rail traffic rebound through the first half is reflected in rail-car orders, according to Economic Planning Associates Inc.’s (EPA) “Rail Car Overview” report for July. After rising to 5,078 units in the first quarter, car orders totaled 4,886 units in the second quarter.

Demand for coal and related service cars, covered hoppers and tank cars primarily drove first-half orders, according to the report.

“While we believe that replacement pressure was the driving force behind coal car demand, the acceleration in ethanol production has sparked renewed interest in hi-cube covered hoppers and certain tank cars,” EPA officials wrote. “The previously dormant small-cube covered hopper segment came back to life in the second quarter as 1,307 cars were ordered by a variety of customer markets ranging from construction materials to food products.”
 
Meanwhile, car builders were “exercising caution” in the second quarter, which represented the second consecutive quarter in which orders outstripped deliveries, EPA said. As a result, backlogs expanded to 14,930 cars at June’s end, the equivalent of 5.1 quarters of car assemblies at the current production rate.
 
“While we appreciate the caution on the part of the car builders as well as the multi-year orders portion of the existing backlogs, we would expect to see a pick up in second-half production runs,” the report states. “Nonetheless, we have lowered our forecast of assemblies this year from 16,000 to 13,250 cars.”
 
An over-supply of rail cars will dampen a rebound in assemblies next year, when deliveries will total only 19,750 cars, according to EPA.

“The extremely low levels of deliveries this year and next will serve to intensify the pressure to replace aged equipment in various fleets during the longer term forecast horizon,” the report states.
 
Car deliveries then will “advance moderately” to 31,000 units in 2012, and incrementally rise each year until they reach about 60,000 units in 2015, EPA said.