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Western steel buyers see shortage of flat cars

Keywords: Tags  rail car, steel, steel buyers, steel mills, steel shipments, Frank Haflich

LOS ANGELES — A growing number of steel buyers in the western United States are concerned by what they claim is a shortage of flat rail cars and efforts by mills to use gondolas instead.

While the problem isn’t seen as universal, and some steel buyers are more bothered than others, more service centers in particular are citing this trend.

"They want to send gondolas," a California plate distributor source said about his mill suppliers, maintaining this is less efficient than using flat cars. "We can do it if push comes to shove, but it’s a problem."

"The market for flats appears to be underserved," said a plate mill executive, who agreed that there aren’t enough of the cars available. He said plate buyers prefer flat cars over gondolas for safety and efficiency reasons.

"We don’t take (gondolas)," said another service center executive, who conceded that his company might nevertheless do so in an "extreme" emergency. He said mills lately are "always asking" his company to accept gondolas instead of flat cars.

Plates are usually unloaded from flat cars with a forklift, buyers pointed out, while loading gondolas usually means they need forklifts with spreaders or overhead cranes.

Moreover, for some plate products shipment by gondola just isn’t practical, said a third distribution executive, citing the example of light plate 3/16-inch thick by 120 inches wide by 480 inches long. "It’s just not going to work," he said.

Although long products such as structural shapes weren’t cited as often, the possibility of the steel shifting makes at least one service center executive uncomfortable. "We don’t want to put our workers inside the cars to hook up beams," he said.

The mill executive pointed out that, unlike what often occurs with trucking companies, railroads so far haven’t reacted to the pinch in flats by charging higher rates—there’s just a "lack of availability." With trucks, by contrast, "if you’re able to pay more, they’ll find a way to send you more trucks," he said.

Some market sources think part of the reason for the pinch in flat cars is due to rail car builders’ emphasis during the past year on tank cars as they look to cash in on a strong market for transporting petroleum products.

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