The economy may still have the slows, but suppliers of equipment to the freight transportation sector say solid demand is filling their order books.
That trend comes through clearly in second-quarter earnings reports by manufacturers, and comments from their executives on what happens next. Industry sources say some interest is sparked by special tax incentives to buy equipment this year, but that underlying freight demand is the main driver.
Trinity Industries, a major builder of railcars – its principal business – and barges, said demand continues strongly from both the rail freight and inland waterway sectors, swelling its manufacturing backlog from just three months ago.
In fact, Trinity said it needs to watch productivity as it ramps up railcar production, and needs to get a flooded Missouri barge facility back to normal.
Railcar leasing firm CIT Rail said it placed orders in June and July with three suppliers for another 5,000 hoppers and tank cars, valued at $475 million. Most are for delivery next year, indicating CIT thinks the bulk carload market will keep getting stronger after its leased fleet utilization rate recently tightened.
This comes despite that overall railcar freight loadings remain weaker than in the spring, after an economic slump curbed traffic in the months since. CIT’s orders are for the types of cars for which supply is already tightening.
Some of that reflects a recent pickup in truck freight after that sector also slumped in the spring.
Mark Pigott, chairman and CEO for Paccar, which makes Kenworth and Peterbilt, cited “stronger truck sales in North America and Europe and an improvement in aftermarket parts sales” as his company’s profit jumped by 141 percent to $240 million. Despite an “uneven economy” in North America, Paccar said capacity constraints for tires and chassis components has its own suppliers investing to meet the increased demand.
And despite recent weakness in ocean intermodal shipping, as U.S. customers delay pulling in some of their usual summer shipments from Asia, container supplier CAI International has seen a jump in containers on lease and in pricing. It has leased out another 13,000 TEUs so far this month, after leasing 39,000 TEUs in the second quarter.
Rail intermodal volume had its strongest 2011 week in early June, and since then has been slow to ramp up toward the normal late-summer peak for ocean arrivals at U.S. ports. Rail executives say domestic box volume has stayed strong, but Asian import traffic has cooled.
They expect that to produce a delayed peak season for import containers hitting the North American rail network.
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