Railway Age | Rudderless Rail Economy Continues Trek

09.01.17 | David Nahass, Railway Age

Industry watchers spend a fair bit of time trying to take economic data and translate it into future carloads and railcar deliveries. Recent economic data continues to confound watchers who, several years into an economic downturn (railcar-wise), struggle to reconcile growth in the broad economy with the weakness in railcar and carload data.

There are some high expectations for second-quarter RSI new car orders. After a first-quarter pop of 4,800 orders, many people are expecting an even higher 2Q2017 number. A slight pop in orders is not a trend. The question about the rail market remains unanswered: Is it strengthening, weakening or trending level? Eric Starks, Chairman and CEO of FTR Transportation Intelligence (and perennial Rail Equipment Finance speaker), is an industry maven piecing all this together to pave the path forward. I caught up with Eric and peppered him with a few questions about the direction of the rail economy.

RA: The Institute for Supply Managment’s Purchasing Manager’s Index (PMI) of manufacturing activity is at the highest level since June 2014. The retail economy seems very healthy. What about the rail economy?

Starks: Data suggests that there is manufacturing and factory expansion. However, it is at modest levels; it is inconsistent and very sector-driven. Retail growth has been so-so, but there is no real strength there. Base manufacturing data says the economy looks a little weaker (and the Fed suggests some contraction while the ISM sees expansion) right now. Railcar loading data has been rather flat. Although the year-over-year numbers look good, vs. the baseline the numbers look pretty flat. In rail, other than intermodal, there really has been little expansion. We are seeing an expansion in truck freight.

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