Railcar leasing giant GATX saw profit in its rail segment soar 93 percent in the third quarter to $63 million, largely due to increases in pricing and fleet utilization.
"Operating conditions remain favorable in the North American rail market,” said President and CEO Brian Kenney.
GATX had 109,091 railcars of various types in its leasing fleet as of Sept. 30, up by just 0.3 percent or 291 units from a year earlier. But a full 98.2 percent of that equipment was bring utilized as the third quarter ended, up from a 96.8 percent utilization rate in the 2010 quarter.
Kenney also cited “high demand for many car types” in the July-September period. That is another indication from the rail industry that freight traffic and equipment demand are holding up, despite warnings that weakness in the broader economy could soon hurt rail volume.
GATX’s lease renewal rates for railcars increased 9.6 percent over expiring rates, compared with a 4.4 percent rise in this year’s second quarter and a 15.7 percent decline in the 2010 third quarter. Equipment lease terms also lengthened to 49 months, GATX said, from 41 months in this year’s April-June quarter and 36 months in last year’s third quarter.
The company also has a smaller railcar lease fleet in Europe, a ship line unit and other segments, but the North American railcar leasing is its largest business. Its rail segment also outperformed the rest, as overall GATX net income rose 56 percent to $32.9 million.
The rail profit rose from a combination of factors, GATX said. More cars on lease and renewals at higher rates meant more revenue, while costs declined for cars being stored.