CHICAGO U.S. rail car
manufacturers are riding the wave of strong demand for tankers
and other types of rail cars for shipping fracking sand,
chemicals, steel pipe and crude oil to and from burgeoning
energy plays across North America.
High order backlogs have led
four North American rail car manufacturersGreenbrier
Cos., Lake Oswego, Ore.; FreightCar America Inc., Chicago;
American Railcar Industries Inc., St. Charles, Mo.; and Trinity
Industries Inc., Dallasto step up production, although
they remain cautious about overbuilding.
"The market is considered to be
very hot," Greenbrier president and chief executive officer
William Furman said. "(But) its difficult to interpret
bookings beyond 2015. How much pipeline capacity has been
added? Past 2014, will demand continue for transportation at
the same pace it is today for oil tanks?"
Even as Furman predicts very
solid demand for tank cars throughout the rest of the decade,
"history demonstrates that its not a good thing to
believe something thats blowing up like a balloon is
going to last forever," he said.
Greenbriers rail car
manufacturing backlog as of Nov. 30 was 9,700 units, and it
expects to deliver 13,000 units this year. It has ramped up
production at its two Mexican tank car plants.
"In response to increased demand
from the strong energy markets, we have built 11,000 tank cars
and hopper cars for the transportation of oil by rail and for
the frac(king) sand markets over the past three years," Furman
told investors late last year.
About 87 percent of the
industrys backlog is for tank and hopper cars, American
Railcar president and chief executive officer James Cowan said
last quarter. Its current output schedule has new orders
through the first quarter of 2014.
"The tank cars were
building now are rather large, have got a lot of steel on them,
and, in some cases, special, expensive steel," American Railcar
senior vice president, chief financial officer and treasurer
Dale Davies said.
Trinity Industries, which has
also noted "consistent demand for products that transport and
store crude oil and other energy-related liquids," recorded a
rail car backlog of $3.3 billion at the end of the third
"The size of these backlogs
gives (us) production visibility into 2014 for products that
serve the oil, gas and chemicals market. We are in the early
stages of extended production runs for these products,"
chairman, president and chief executive officer Tim Wallace