We have increased conviction that railcar leasing fundamentals will remain exceptional through 2025, while rising economic and tariff uncertainty suggest lower for longer railcar orders with downside risks to nearer-term new car
The fourth quarter was “the best quarter of 2023 for U.S. rail volumes on a year-over-year basis,” AAR Senior Vice President John T. Gray reported Jan. 2. “It appears that intense rail efforts to improve service quality are paying off. Railroads are hopeful that gains in the fourth quarter will carry over into the first quarter of 2024 and beyond.”
Three days with hundreds of rail equipment industry participants at Rail Equipment Finance 2023 reveal a railcar market that is healthier than we’ve feared into 2023 (lease rate inflation overwhelming the demand-side drag from anemic rail volumes), while the runway for continued investment in diesel locomotives appears to stretch into the 2030s (both rebuilds and new).
Through the first five weeks of 2023 (ending Feb. 4), total North American carload and intermodal traffic was virtually flat (-0.9%) with same point last year, according to the Association of American Railroads’ (AAR) Feb. 8 report. Both the U.S. and Mexico experienced decreases, while Canada saw growth.
U.S. freight rail traffic in Week 3 (ending Jan. 21, 2023) dipped 2.1% from the prior-year period, the Association of American Railroads (AAR) reported Jan. 25. Traffic trailed the same period in 2019 by 14%, according to Susquehanna Financial Group (SFG) Analyst Bascome Majors.
Norfolk Southern’s (NS) growth strategy was laid out at its Dec. 6 Investor Day, the first under new President and CEO Alan Shaw. Not a “grow-at-all-cost strategy,” Shaw said the Class I will balance three key elements: “Reliable and resilient service; continuous productivity improvement; and smart and sustainable growth.” Cowen and Company and Susquehanna Financial Group (SFG) weigh in.
For the week ending Nov. 26, 2022 (Week 47), total U.S. rail traffic was down 4.1% compared with the same week last year, the Association of American Railroads’ (AAR) reported on Nov. 30. Traffic was down 21% compared with the same week in pre-pandemic 2019, according to Susquehanna Financial Group (SFG) Analyst Bascome Majors.
U.S. rail traffic for the week ending July 23, 2022 (Week 29) was 498,901 carloads and intermodal units, down 0.8% from the same week last year. Total carloads were 232,565, up 1.1%, while U.S. intermodal volume of 266,336 containers and trailers dipped 2.5% compared with the prior-year period, the Association of American Railroads reported on July 27.
For the week ending June 25, 2022 (Week 25), U.S. rail traffic was 493,374 carloads and intermodal units, down 4.4% from the prior-year period, the Association of American Railroads (AAR) reported June 29. Class I railroads hauled 229,857 carloads, down 3.1%, and 263,517 containers and trailers, down 5.5%. Year-to-date, carloads were virtually flat (down 0.1%) and intermodal volume fell 3.5% compared with the same point last year.
U.S. freight rail traffic dipped again in Week 23, compared with the prior-year period, as carloads were down 2.8% and intermodal fell 4.4%, the Association of American Railroads (AAR) reported for the week ending June 11, 2022.
