There are indications that adding to your railcar fleet now may yield value benefits in the future. Here’s why: Like anything else, the value of used railcars fluctuates with demand. Over time, we have seen the value of railcars in the secondary market rise and fall with changes in the economy overall, as well as changes within business sectors.
So what does the current data tell us? As reported by Progressive Railroading, the Railway Supply Institute’s American Railway Car Institute Committee reports as follows: “The number of rail cars ordered in Q2 plummeted to 1,923 units from 11,754 ordered during the same period a year ago. Orders previously totaled 6,172 units in the first quarter and 8,464 units in fourth-quarter 2019.” Similarly, “Meanwhile, the rail-car backlog stood at 39,612 units on July 1, down from 46,330 units on April 1. The backlog previously totaled 51,295 units on Dec. 31, 2019, and 58,127 units on Oct. 1, 2019.”
Translated, people are ordering the fabrication of far fewer new railcars than is typical. Also, it is reasonable to expect this will continue for some time as industries would be expected to be cautious to change this investment pattern quickly in the coming months and perhaps years.
A slowing in the fabrication of new railcars will only translate to improved value of the existing fleet over time. Let us know what we can do to help you add to your equipment inventory at this time of depressed pricing.
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