Iowa Pacific making room for more rail-car storage

Iowa Pacific Holdings LLC (IPH) has re-acquired a rail-car storage business and expanded its car capacity to 10,000 units across its short lines, the company announced yesterday.

Iowa Pacific is repurposing track for rail-car storage as a result of the U.S. Department of Transportation's (USDOT) new tank-car safety regulations, company officials said in a press release.

"As a result of emerging USDOT and [Pipeline and Hazardous Materials Safety Administration] regulations, severe disruptions are occurring to tank car fleets nationwide and demand for short- and long-term storage is growing," said Todd Cecil, vice president of real estate, who manages IPH's rail-car storage business.

"Clearly, the number of cars being displaced over the coming months exceeds the existing capacity for storage, so IPH is repurposing track for storage, and making it available to tank car fleet operators who need to ensure that they can park railcars cost-effectively when the time comes," Cecil said.

Rail-car owners are trying to determine how many of the estimated 80,000 non-compliant cars will be modified and remain in service, and how many will come out of service, said IPH President Ed Ellis.

"A substantial number of the idle cars will remain under lease and will need to be stored, perhaps as many as 50,000 cars," Ellis said. "That’s over 500 miles of cars, and there just isn’t that much storage available. Even with Iowa Pacific’s expansion of storage capacity for large fleet operators, there will soon be a shortage of storage space."

In recent weeks, three trains of empty tank cars have moved into IPH storage in Colorado. IPH owns and operates 11 short lines in the United States and United Kingdom.