Surging prices for railcars as demand runs up against supply shortages

An article in the Wall Street Journal (May 30,2014) titled “Driller’s Pain is Railcar Owner’s Gain”, describes 33% price increases for tank cars, 50% increases for cars hauling sand and 40% increases for grain hoppers. These price increases reflect the interaction between cars that were scrapped in 2008 and reduced capacity, delayed orders and deliveries for new railcars and large crop yield of corn and soy-beans, fracking industry shipments. Will the new railcars that hit the market be too late for the current demand surge and thus drive down prices and create overcapacity? Will the planned US and Canadian rules for puncture resistant cars justify this capacity increase even if demand drops ? Should there be some market coordination of railcar deployment to prevent hazardous cargo from being moved to trucks ?

About aviyer2010

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