John D. Boyd | Apr 23, 2010 12:57PM EDT
Although many rail shippers see railroads raising their freight rates, some key equipment costs shippers pay are still declining this year.
Railcar leasing firm GATX said its lease price index for the first quarter fell another 15.2 percent in the first quarter after an 18.7 percent decline in the last quarter of 2009. In the first quarter of last year, the company’s price gauge contracted just 5.5 percent.
GATX had 109,000 railcars available for lease in North America as of March 31, and said 96 percent of them were utilized in the period. That was up slightly from 95.9 percent utilization at the end of December, but down from 96.9 percent at the end of the 2009 first quarter.
However, while GATX has a large fleet of different car types to lease to shippers or railroads, it is one of several large lessors that are all marketing their equipment while hundreds of thousands of available cars stand idle due to a lack of freight to move.
It terms of pricing as small numbers of cars periodically come up for lease renewal “there are some signs of improvement, although sporadic,” said Chief Financial Officer Robert Lyons. While freight shipments are rising, the equipment market “is not yet showing consistent signs of recovery,” he said.
Brian Kenney, GATX president and CEO, said railcar markets overall are stabilizing, but the overhang of idled construction and intermodal railcars means demand and pricing for those car types “are still very, very weak.”
He said pricing may not recover this year, and it may be 2011 before railcar lease revenue climbs again.
GATX earned $18.7 million in the January-March quarter, down 32 percent from a year earlier. Its rail segment profit was actually up, as it sold some railcars. Lease revenue, which is overwhelmingly from railcars, was down 5 percent to $221 million.
Contact John D. Boyd at jboyd@joc.com.
