GLG News by Railcar Market Experts (EU)

Toby KolstadPresidentRail Theory Forecasts

Coal exports are helping, but railroad coal stats are dismal

July 11, 2011

Analysis of:US coal exports reach 19-year high, up 20 percent | www.topix.net

Last year, almost 82M tons of coal were exported (up 38% from 2009) but production totaled around 1.085B tons, up less than 1% from 2009. This year, the situation is much the same; coal exports were up 48% in the first quarter but production for the first half of 2011 was less than last year. Rail traffic was much the same. Without those exports, the traffic sector for the railroads would have been much worse.

Toby KolstadPresidentRail Theory Forecasts

Big intermodal plans in West, but few results to date

June 29, 2011

Analysis of:Western rails get ready to redraw intermodal map | www.dcvelocity.com

The western rail carriers have benefitted more than their eastern counterparts from the boom in imports. They have provided land-bridges between West Coast ports and Midwestern cities for many years that were very difficult for trucking companies to match. Now BNSF and Union Pacific claim to be going after the domestic traffic in the West where trucking companies have traditionally enjoyed cost and service advantages. There’s been a lot of talk of success, but few real numbers to support their claims.

Toby KolstadPresidentRail Theory Forecasts

Railroad traffic confirms economic slowdown

June 29, 2011

Analysis of:Rail Automobile Shipments Reach Two-Month High | www.joc.com

Notwithstanding the good news for some traffic segments, carloads are down for more than a few railroad traffic groups and the overall assessment is that the first quarter totals may not be much higher than those of the first quarter. Rail traffic is a good barometer of the overall economy and the lackluster traffic in the second quarter is expected to be reflected in the GDP, which is not expected to increase much beyond the 1.9% recorded in the first quarter.

Toby KolstadPresidentRail Theory Forecasts

Prospects for railcar builders and railroad companies look very different

May 26, 2011

Analysis of:Rail Orders at 13-Year High Validate Buffett: Freight Markets | www.bloomberg.com

In the short term, i.e., this year and next, the fortunes of the two related industries could be very different, regardless of what happens in the overall economy. The rosy outlook painted by many “rail industry” analysts overlooks some basic differences between the two industries and misinterprets some of the recent developments to paint the future of both industries with the same brush.

Toby KolstadPresidentRail Theory Forecasts

Unusual factors driving demand for new railcars

May 3, 2011

Analysis of:EPA: 37,000 new freight cars this year | www.railwayage.com

While railcar traffic is up, the volume is still below pre-recession levels and there are hundreds of thousands of surplus railcars of every type. So why are there so many orders for new cars and why are the builders' production rates expected to increase so rapidly? If deliveries fall between the 35,000 and 42,000 cars predicted by the forecasting community, the increase in production, as measured as a one year percentage gain over the bottom of the recession, will exceed any previous recovery.

Toby KolstadPresidentRail Theory Forecasts

EIA sees only marginal increase in coal production in 2011

April 25, 2011

Analysis of:EIA Short term energy outlook | www.eia.doe.gov

Although they are forecasting that coal exports will rise to 88M tons this year, the EIA is estimating that overall production will only increase slightly over 2010 totals, which were only up 1% over those of 2009. Through mid-April, EIA weekly estimates show an 0.8% rise in production compared to the 2.9% increase in AAR reported railcar loads for the same period. EIA estimates are always revised and the AAR numbers may be a better indicator of the current status in the coal fields.

Toby KolstadPresidentRail Theory Forecasts

Rail traffic continues to point to a strengthening economy

April 8, 2011

Analysis of:Rail Carload Volume Hits Highest Level Since Late '08 | www.joc.com

Rail traffic is like the canary in the coal mine for the economy: it sings when times are good and doesn’t when they’re not. Despite of the troubles in the Arab World, the catastrophe in Japan, and the budget problems facing lawmakers, the canary is singing. Rail carload traffic is solidly above 2010 levels and climbing toward the pre-recession levels of early 2008 and intermodal traffic has already slipped past pre-recession levels and could set a new benchmark by the end of the year.

Toby KolstadPresidentRail Theory Forecasts

Greenbrier benefits from change in intermodal logistics

March 18, 2011

Analysis of:Greenbrier Nabs Orders for 4,200 Railcars | www.joc.com

The recent spate of orders for intermodal railcars seems to defy logic when one counts the thousands of relatively new intermodal cars in storage. However, there have been a few operational changes in the intermodal sector which are driving the need for intermodal cars designed to carry 53’ (domestic) containers. All of the intermodal cars in storage have 40’ wells and are best suited for the international containers.

Toby KolstadPresidentRail Theory Forecasts

GATX and Trinity Industries make up

March 15, 2011

Analysis of:GATX to buy 12.5K railcars from Trinity over 5 yrs | www.whbf.com

Four years ago, Trinity Industries was so aggressive in the leasing business that GATX and other major railcar leasing companies were grumbling that they might not buy cars from them anymore. Time and low prices have always smoothed ruffled feathers and that is what seems to have apparently happened just now. GATX has purchased large quantities of railcar in the past from Trinity and their recent order signals both a renewed confidence in the market and a close relationship to a major builder.

Toby KolstadPresidentRail Theory Forecasts

FreightCar America sustained by orders for export coal cars

February 22, 2011

Analysis of:Norfolk Southern to buy cars | www2.timesdispatch.com

Norfolk Southern Corporation recently announced their order of 3,000 steel and aluminum/steel hybrid coal cars for delivery in 2011-2012, matching an almost identical order of CSX Corporation for cars to be delivered in 2010-2011. Both companies are expected to use the cars primarily to transport coal destined for export from East Coast ports. FreightCar America seems to have a lock on the market for these cars, but is suffering from the general downturn in the coal car market.

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