Committee Rail Fleet Update September 19, 2013 Agenda Railcar - - PowerPoint PPT Presentation

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Committee Rail Fleet Update September 19, 2013 Agenda Railcar - - PowerPoint PPT Presentation

Aug 30, 2023 44 likes •208 views

Rail Energy Transportation Advisory Committee Rail Fleet Update September 19, 2013 Agenda Railcar Demand Drivers Freight Car Orders North American Railcar Fleet Tank Car Regulatory / Industry Standard Developments Energy Segments 2 Rail

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Rail Energy Transportation Advisory Committee Rail Fleet Update

September 19, 2013

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2 Rail Energy Transportation Advisory Committee 9/19/2013

Agenda

Railcar Demand Drivers Freight Car Orders North American Railcar Fleet Tank Car Regulatory / Industry Standard Developments Energy Segments

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3 Rail Energy Transportation Advisory Committee 9/19/2013

Railcar Demand Drivers

  • Key drivers of rail traffic: GDP, industrial output, commodity carloads, Intermodal
  • NAFTA GDP growth is forecasted at 1.9% in 2013 and 2.9% in 2014
  • Industrial production growth is forecasted at 2.8% in 2013 and 3.2% in 2014
  • Housing starts to reach 1.01 million in 2013 (+29%) and 1.10 million in 2014
  • 2012 Weak grain and coal environments offset by strong growth in petroleum,

motor vehicles, aggregates, and lumber.

  • USDA is projecting strong production and exports for a variety of grains in the

2013/2014 marketing year, boosting demand for grain and fertilizer cars

  • Chemicals growth projected in North America as shale gas boom creates

investment opportunity for U.S. manufacturing

  • 2013 Commodity carloads +0.8% and Rail traffic +1.8%

Source: IHS Global Insight, AAR

Overall growth suggests a favorable outlook for rail traffic and new equipment investments.

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4 Rail Energy Transportation Advisory Committee 9/19/2013

ARCI Freight Car Builds

YTD Deliveries YTD Orders Backlog

Source: Railway Supply Institute, ARCI 2013 2Q Report

395 2,247 3,330 26,211 807 5,761 CH (> 5500 c/f) CH (3500-5500 c/f) CH (< 3500 c/f) Tank GT Gondolas / Open Top Hoppers Other 1,512 1,741 1,864 12,967 653 5,719 CH (> 5500 c/f) CH (3500-5500 c/f) CH (< 3500 c/f) Tank GT Gondolas / Open Top Hoppers Other 100 2,775 2,821 61,350 882 5,778 CH (> 5500 c/f) CH (3500-5500 c/f) CH (< 3500 c/f) Tank GT Gondolas / Open Top Hoppers Other

Plastics, DDG Grain, Fertilizer Sand/Cement

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5 Rail Energy Transportation Advisory Committee 9/19/2013

Total Freight Car Demand

Product ction Foreca cast 2012 A A 2013 F F 2014 F F 2015 F F 2016 F F 2017 2017 Economic Planning Associates 58,904 52,500 60,250 64,250 63,750 64,750 Global Insight 58,904 51,793 64,139 67,917 56,232 51,476 FTR Associates 58,904 49,726 58,500 58,000 57,600 60,200

Total Railcar Backlog = 73,706 cars YTD Orders = 38,751 cars YTD Deliveries = 24,456 cars

Source: ARCI 2Q-2013

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6 Rail Energy Transportation Advisory Committee 9/19/2013

Tank Car Demand

Product ction Foreca cast 2012 2012 A 2013 F F 2014 F F 2015 F F 2016 F F 2017 F F Economic Planning Associates 17,666 28,500 32,000 28,000 24,000 22,000 Global Insight 17,666 26,306 26,070 21,706 12,147 11,381 FTR Associates 17,666 27,467 28,900 22,700 16,100 16,400

Tank Backlog = 61,350 cars YTD Orders = 26,211 cars YTD Deliveries = 6,887 cars

Source: ARCI 2Q-2013

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7 Rail Energy Transportation Advisory Committee 9/19/2013

Total Covered Hopper Car Demand

Product ction Foreca cast 2012 A A 2013 F F 2014 F F 2015 F F 2016 F F 2017 F F Economic Planning Associates 20,691 10,500 11,500 15,500 16,000 16,500 Global Insight 20,691 11,253 15,303 18,086 16,138 13,177 FTR Associates 20,691 9,617 15,300 18,000 20,900 20,600

Covered Hopper Backlog = 5,696 cars YTD Orders = 5,972 cars YTD Deliveries = 5,117 cars

Source: ARCI 2Q-2013

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8 Rail Energy Transportation Advisory Committee 9/19/2013

Covered Hopper Car Demand

(<3500 c/f) Sand, Cement

Product ction Foreca cast 2012 A A 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 Economic Planning Associates 13,781 4,000 5,000 7,000 6,000 6,000 Global Insight 13,781 4,692 4,667 3,979 2,824 2,372 FTR Associates 13,781 1,832 2,830 2,710 2,800 2,480

Covered Hopper Backlog = 5,696 cars YTD Orders = 5,972 cars YTD Deliveries = 5,117 cars

Source: ARCI 2Q-2013

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9 Rail Energy Transportation Advisory Committee 9/19/2013

Tank Car Fleet

100,000 150,000 200,000 250,000 300,000 350,000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Pressure Car Fleet General Purpose Fleet

Tank Car National Fleet

  • Overall growth the tank car fleet, up 3.4% over 2012.
  • General Purpose fleet (261k cars) increased 2% (2010-2013)
  • Average age of tank fleet = 16 years (IHS)
  • 2013 Tank car demand = 35% replacement and 65% new demand (IHS)

Source: RailInc, IHS Global Insight *Note Annual data is represented as of first of the year

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10 Rail Energy Transportation Advisory Committee 9/19/2013

Small Cube Fleet

  • Majority of fleet today in Cement/Sand Service
  • 25.8k cars built between 2011-12, roughly 20% of National Fleet
  • National fleet grew by 11k+ units in 2013 due to 13.8k new builds, however

forecast for small cube new builds projected to be significantly less (2013-17)

  • Average age Covered Hoppers < 4000 c/f = 13.2 yrs. (IHS)

10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: IHS Global Insight, Railinc, GERS *Note Annual data is represented as of first of the year

Small Cube National Fleet

(< 4000 c/f)

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11 Rail Energy Transportation Advisory Committee 9/19/2013

Tank Car Regulatory / Industry Standard Developments

  • Transport Canada Emergency Directive No. H096/13, Unattended hazmat train

requirements

  • AAR Circular Letter CPC-1257, pressure relief valve requirements
  • FRA Emergency Order No. 28, Notice No. 1, Hazmat train definition and

unattended hazmat train requirements

  • AAR Circular No. OT-55-N, Operating practices for hazmat trains
  • Reactivation of AAR TCC Docket T87.6 Task Force, Industry standards for ethanol

and crude oil tank cars

  • FRA/PHMSA Public Meeting, Potential edits, corrections and deletions to (CFR)

Parts 171 and 174

  • Rail Safety Advisory Committee (RSAC) Public Meeting, Hazmat train operations
  • PHMSA Advanced Notice of Proposed Rulemaking (HM-251), Rail Petitions and

recommendations to improve the safety of railroad tank car transportation of hazardous materials

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12 Rail Energy Transportation Advisory Committee 9/19/2013

Energy Segments

  • Coal
  • Renewable Fuels
  • Petroleum Products
  • Frac Sand
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13 Rail Energy Transportation Advisory Committee 9/19/2013

Coal

  • Power sector consumption of coal

projected to recover by 9% (in tonnage terms) in 2013

  • Coal movements improved slightly in 2Q

2013, and projected to continue at a modest growth rate 2014-17.

  • Impacted by low natural gas prices and

weak electricity demand

  • Strong Coal exports in the first quarter,

however full year 2013 projected -10% vs. last year.

  • Longer-term average consumption growth

0.5% (EIA forecast 2013-2040) resulting in loss of coal share in U.S. power gen mix

  • Approx. 258,000 coal cars in the North

American Fleet

Coal Carloadings

(millions)

Source: FTR Associates, 2Q 2013 Source: IHS Global Insight, FTR Associates, Railinc/GERS

5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

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14 Rail Energy Transportation Advisory Committee 9/19/2013

Renewable Fuels

  • Renewable Energy production projected to

grow 87% over the EIA forecast period (2013-2040)

  • U.S. biofuel mandate remains in line with

the previous forecast as cellulosic production is expected to remain muted

  • Adverse conditions for ethanol demand in

2012 due to drought, record corn prices, and drop in gasoline demand.

  • Ethanol production projected to increase

10% in 2013 and 7% in 2014 (IHS)

  • Flexibility of assets in/out of Crude market

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040

Renewable Energy Production Forecast*

(quadrillion Btu)

Source: IHS Global Insight, EIA, Informa Economics, Source: EIA, Annual Energy Outlook 2013 *Excludes Biomass and Hydropower

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15 Rail Energy Transportation Advisory Committee 9/19/2013

Petroleum

  • U.S. production of oil and gas increased

9.6% in 2012 and is forecasted to grow 5.1% in 2013.

  • Petroleum demand projected to increase

3.4% in 2013.

  • U.S. Petroleum Carloads projected to

increase 29% in 2013 and 14% in 2014. Canadian up 17% in 2013 and 7% in 2014.

  • Crude oil and lease condensate production

forecasted to grow 5% in 2014.

  • Total Canadian crude oil production is

forecasted to increase 22% (2012-2015) to 3.9 million b/d by 2015, up to 6.7 million b/d by 2030.

  • Brent-WTI price spreads have dropped in

2013 and projected to narrow over the long term forecast period

Source: IHS Global Insight, EIA, CAAP

Petroleum & Pdts. Loadings

(thousands)

Source: IHS Global Insight, May 2013

200 400 600 800 1,000 1,200 1,400 1,600 2010 2011 2012 2013 2014 2015 2016 2017

Canada U.S.

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16 Rail Energy Transportation Advisory Committee 9/19/2013

Frac Sand

  • Construction is driving nonmetallic mineral

demand (6% increase in 2013)

  • Forecast for construction activity to expand

6.0% in 2013 up to 9.5% in 2014.

  • Nonmetallic mineral production growth is

forecasted at 3.7% in 2013, 2.6% in 2014

  • Growth in nonmetallic mineral carloadings

projected at 2% per year (2013-2015) Nonmetallic Minerals Carloadings

(millions)

Source: IHS Global Insight, EIA, FTR Associates

Source: FTR Associates, Q2 2103 *Nonmetallic Minerals, Except Fuels

1.00 1.20 1.40 1.60 1.80 2.00 2.20 2.40 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016