GLG News by Railcar Leasing Experts

Toby KolstadPresidentRail Theory Forecasts

Freight Car deliveries and Orders exploded in fourth quarter

February 18, 2011

Analysis of:North American Fourth Quarter Rail Freight Car Orders | www.bloomberg.com

Rail car deliveries almost doubled from third quarter levels and orders advanced on the already healthy levels reported last October. Trinity Industries announced that their deliveries doubled and Greenbrier reported substantially higher deliveries from their previous respective quarters. Only FreightCar America and American Railcar have not reported fourth quarter activities, and they are expected to announce similar results.

Toby KolstadPresidentRail Theory Forecasts

Rail traffic decrease due to weather

February 11, 2011

Analysis of:Intermodal Traffic Takes First Dip in a Year | www.ttnews.com

Almost coincidentally with a storm in early 2010, weather hampered rail operations during the week ending February 5th. Carload traffic just matched the same week last year and intermodal traffic was down 1.5%. Both because traffic will return to normal and because last year’s storm occurred during this week, carload and intermodal traffic are expected to post major gains for the week which will end Feb. 12th.

Toby KolstadPresidentRail Theory Forecasts

Based backlogs, Greenbrier could be dominant railcar builder in 2011

February 4, 2011

Analysis of:Rail-car deliveries to reach 27,000 units in 2011, EPA says | www.progressiverailroading.com

The fourth quarter results from the railcar builder’s association had a big surprise: deliveries jumped from 3,706 in the third quarter to 7,333 cars in the fourth. One builder is expected to announce that their deliveries increased by 300%. The orders came in as expected, and The Greenbrier Companies, which has already reported their first quarter results, ended the year with what is expected to be the largest backlog of all the builders.

Toby KolstadPresidentRail Theory Forecasts

“Modest gains” is too timid; Railroad carload traffic is “growing strongly”!

January 28, 2011

Analysis of:AAR: “Modest gains” in Week 3 traffic | www.railwayage.com

The AAR categorization of last week’s traffic gains as modest only looks at the absolute numbers: 1.5% carload growth compared to the same week last year. When the weekly gyrations in carload totals in past years and the severe weather that has plagued the nation since the start of this year are considered, any gains reflect a recovering economy and a strong railroad performance. Carload traffic is expected to grow 3% in 2011, which in normal times would reflect a booming economy.

Toby KolstadPresidentRail Theory Forecasts

UP Railroad had the biggest intermodal gains in railroad industry during 2011

January 21, 2011

Analysis of:UP Expects More Intermodal From Truckers | www.joc.com

The Union Pacific posted a gain of approximately 20% for intermodal traffic in 2010, outpacing Norfolk Southern (+18%) and CSX (16%) in the East, but also bettering privately held BNSF in the West for which the AAR shows an increase of 10% in intermodal loads. Imported containers contributed most of the additional traffic, but the railroads also claim to be gaining domestic market share, and they are backing their claims with purchase orders for over 5,000 new domestic container cars in 2011.

Toby KolstadPresidentRail Theory Forecasts

Early gains in Intermodal may be misleading, but traffic is definitely up

January 14, 2011

Analysis of:Intermodal Traffic Rises 8.6% for Week | www.ttnews.com

Compared to the same week last year, railroad intermodal traffic reported by the AAR jumped 8.6%. However, the holiday schedules were different and that could have affected traffic totals a little. A better measure of this year compared to last will not be available for a couple of weeks yet.

Toby KolstadPresidentRail Theory Forecasts

Bring on the double dip! Gasoline to rise to $4.00 in 2011

January 3, 2011

Analysis of:Oil's surge in 2010 paves the way for $4 gasoline | finance.yahoo.com

Gasoline prices rose above $3.00 so rapidly in December that many are predicting that they will keep rising to over $4.00 per gallon. These same pundits say that isn’t that bad, since it represents only $750 per year per motorist. Phrased another way however, let’s say as a new energy tax of $1,200 per household, many would warn of an imminent recession.

Toby KolstadPresidentRail Theory Forecasts

Bigger trucks would cost more than they would save

November 23, 2010

Analysis of:US Trucking Industry Pushes For Heavier Trucks On Roads | news.morningstar.com

By some convoluted reasoning, legislators are being asked to save wear and tear on local roads by letting bigger trucks use the Federal Interstate Highway system. The Obama Administration is even endorsing their reasoning. Who let the big rigs get loaded in the first place? Allowing them on the Interstate System will only shift the maintenance costs from the people who made that mistake to the rest of the country.

Toby KolstadPresidentRail Theory Forecasts

Surplus railcars still abound, but not as much as the AAR reports

November 18, 2010

Analysis of:Railcar Owners Shrink Idled Car Fleet in October | www.joc.com

The AAR’s most recent tally of surplus railcars totaled over 318,000 units, or about 20% of the national fleet. However, rail traffic is down only 12% from its pre-recession highs. It is more likely that the car surplus is closer to 190,000. This is still a very high number and will depress demand for new cars and lease rates for many months to come, but it will eventually go away as opposed to the surplus numbers reported by the AAR.

Toby KolstadPresidentRail Theory Forecasts

Greenbrier’s problems are common to all car builders, but…

November 11, 2010

Analysis of:Greenbrier Q4 loss wider than expected; sees loss in Q1 | www.reuters.com

Greenbrier’s projection that it did not see a turnaround in its near term future and that output and profits might not rebound until the second half of 2011 might be a common theme among all railcar builders. However, Greenbrier’s practice of backlogging “nonbinding” orders often distorts the outlook for the company and the “cancellation” of these orders can produce unnecessary surprises.

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