Rails Response to COVID-19 A Joint Webinar from FTR & RFC Rails - - PowerPoint PPT Presentation

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Rails Response to COVID-19 A Joint Webinar from FTR & RFC Rails - - PowerPoint PPT Presentation

Jun 21, 2023 264 likes •689 views

Rails Response to COVID-19 A Joint Webinar from FTR & RFC Rails Response to COVID-19 A Joint Webinar from FTR & RFC Eric Starks Todd Tranausky David Nahass William Geiger FTR Chairman & CEO FTR VP of Rail & Intermodal

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SLIDE 1

Rail’s Response to COVID-19

A Joint Webinar from FTR & RFC

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SLIDE 2

Rail’s Response to COVID-19

A Joint Webinar from FTR & RFC

Eric Starks

FTR Chairman & CEO

Todd Tranausky

FTR VP of Rail & Intermodal

David Nahass

RFC President

William Geiger

RFC Senior VP

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§Economy & Recovery §Rail Equipment Finance Conference Takeaways §Rail Freight & Equipment Outlook §Q&A

Agenda

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Economy

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SLIDE 7

Real GDP

Q/Q change, seasonally adjusted annual rate

  • 4.8%
  • 22.0%

13.9% 7.9% 4.7% 4.9% 4.4% 4.1%

  • 30.0%
  • 20.0%
  • 10.0%

0.0% 10.0% 20.0% 30.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2020 2020 2020 2020 2021 2021 2021 2021

Current Forecast Prior Forecast

Source: FTR; Witte Econometrics

7

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SLIDE 8

GDP Goods Transport Sector

Q/Q change, seasonally adjusted annual rate

Source: FTR; Witte Econometrics

8

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  • 4.2%
  • 32.0%

10.2% 16.3% 9.1% 8.9% 8.7% 7.6%

  • 60.0%
  • 50.0%
  • 40.0%
  • 30.0%
  • 20.0%
  • 10.0%

0.0% 10.0% 20.0% 30.0% 40.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2020 2020 2020 2020 2021 2021 2021 2021

Current Forecast Prior Forecast

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SLIDE 9

Industrial Production

Q/Q change, index, seasonally adjusted annual rate

Source: FTR; Witte Econometrics

9

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  • 7.1%
  • 36.6%
  • 1.3%

7.1% 9.8% 9.0% 7.2% 6.0%

  • 40.0%
  • 30.0%
  • 20.0%
  • 10.0%

0.0% 10.0% 20.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2020 2020 2020 2020 2021 2021 2021 2021

Current Forecast Prior Forecast

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SLIDE 10

UNEMPLOYMENT DURING COVID-19

Weekly initial claims for unemployment insurance benefits, seasonally adjusted

Source: FTR; U.S. Department of Labor

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3,307 6,867 6,615 5,237 4,442 3,867 3,176 2,687 2,446 2,126 1,877

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 3/21/2020 3/28/2020 4/4/2020 4/11/2020 4/18/2020 4/25/2020 5/2/2020 5/9/2020 5/16/2020 5/23/2020 5/30/2020

Thousands

Previous high = 695,000 in October 1982

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SLIDE 11

WTI CRUDE PRICE (PER BARREL)

Daily price

Source: FTR; Energy Information Administration (EIA)

11

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($50) ($40) ($30) ($20) ($10) $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 F M A M J J A S O N D 1 9 F M A M J J A S O N D 2 F M A M J

April 20, 2020: -$37.63 Lowest price ever

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Key Takeaways from the 2020 Rail Equipment Finance Conference

A Pre- & Post-Pandemic Look

June 9, 2020 FTR & RFC Joint Webinar

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1) Loadings: seeking stability

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2) PSR: velocity & car demand

Source: Matt Leonard / Supply Chain Dive, data from the STB

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3) New Car Demand: Weakening

Source: ARCI Committee of RSI

89,581 80,824 46,300 17,400 5,900 12,000 11,600 11,900 13,800 22,500 29,649 31,900 24,589 25,261 35,226 53,269 60,615 57,342 49,891 74,832 74,044 55,791 34,258 17,714 32,176 46,871 68,612 74,731 63,156 59,954 21,682 16,523 47,350 58,904 53,050 67,282 82,296 62,433 45,086 50,803 58,026 39,000

  • 10,000

20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Total Railcar Deliveries

~21,000 15

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4) Rental Rates: continued stress

PSR + Loadings + Over supply =

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– ICE BoA BBB US Corp Index Option Adjusted Spread – ICE BoA Single-A US Corp Index Option Adjusted Spread

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5) Equipment Investors: seek growth & profit

Pre-pandemic

  • Optimism
  • Long-term asset values
  • Utilization
  • Cash Flow

Post-pandemic

  • On lease assets
  • Secondary & new car market

sales dichotomy

  • Ongoing activity
  • Downward price pressure

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6) Equipment Investors: modal shift concern

Post-pandemic

  • Oil Price Collapse
  • Sum of fears
  • Lessors under attack
  • Customers don’t feel valued
  • Net/net: potential for

permanent lost carloads

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Pre-pandemic

  • Lacking partnership
  • Collaborative growth
  • Modal shift threat
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SLIDE 19

7) Intermodal: growth & expansion?

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8) Locomotive: continued struggles

Post-pandemic

  • Similar dynamics to railcars
  • EPA emissions
  • Auctions likely

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Pre-pandemic

  • Tier IV pricing
  • PSR & loadings challenges
  • Remanufacturing bright spot
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SLIDE 21

Rail Freight & Equipment Outlook

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Why do you buy a Rail Car?

TO MOVE FREIGHT!

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TOTAL: COVID-19 Rail Freight Recovery Index

N.A. Carload (100 = Full recovery to pre-pandemic volumes)

Restart Phase Full Recovery Phase Shutdown Phase

75 80 85 90 95 100 105

1 / 1 1 / 2 2 1 / 1 8 / 2 2 1 / 2 5 / 2 2 2 / 1 / 2 2 2 / 8 / 2 2 2 / 1 5 / 2 2 2 / 2 2 / 2 2 2 / 2 9 / 2 2 3 / 7 / 2 2 3 / 1 4 / 2 2 3 / 2 1 / 2 2 3 / 2 8 / 2 2 4 / 4 / 2 2 4 / 1 1 / 2 2 4 / 1 8 / 2 2 4 / 2 5 / 2 2 5 / 2 / 2 2 5 / 9 / 2 2 5 / 1 6 / 2 2 5 / 2 3 / 2 2 5 / 3 / 2 2 6 / 6 / 2 2 6 / 1 3 / 2 2 6 / 2 / 2 2 6 / 2 7 / 2 2

Rail Freight Recovery Index: Carload

Last Updated: 6/3/2020 23

Download Slides at: www.FTRintel.com

Source: AAR, FTR Analysis by FTR | Transportation Intelligence™ of AAR Weekly Rail Traffic Report

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INTERMODAL: COVID-19 Rail Freight Recovery Index

N.A. INTERMODAL (100 = Full recovery to pre-pandemic volumes)

Restart Phase Full Recovery Phase Shutdown Phase

85 90 95 100 105 110

1 / 1 1 / 2 2 1 / 1 8 / 2 2 1 / 2 5 / 2 2 2 / 1 / 2 2 2 / 8 / 2 2 2 / 1 5 / 2 2 2 / 2 2 / 2 2 2 / 2 9 / 2 2 3 / 7 / 2 2 3 / 1 4 / 2 2 3 / 2 1 / 2 2 3 / 2 8 / 2 2 4 / 4 / 2 2 4 / 1 1 / 2 2 4 / 1 8 / 2 2 4 / 2 5 / 2 2 5 / 2 / 2 2 5 / 9 / 2 2 5 / 1 6 / 2 2 5 / 2 3 / 2 2 5 / 3 / 2 2 6 / 6 / 2 2 6 / 1 3 / 2 2 6 / 2 / 2 2 6 / 2 7 / 2 2

Rail Freight Recovery Index: Intermodal

Last Updated: 6/3/2020 24

Download Slides at: www.FTRintel.com

Source: AAR, FTR Analysis by FTR | Transportation Intelligence™ of AAR Weekly Rail Traffic Report

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ESF: COVID-19 Rail Freight Recovery Index

Economically Sensitive Freight (excludes Ag/Petro/Coal) (100 = Full recovery to pre-pandemic volumes)

Restart Phase Full Recovery Phase Shutdown Phase

70 75 80 85 90 95 100 105

1 / 1 1 / 2 2 1 / 1 8 / 2 2 1 / 2 5 / 2 2 2 / 1 / 2 2 2 / 8 / 2 2 2 / 1 5 / 2 2 2 / 2 2 / 2 2 2 / 2 9 / 2 2 3 / 7 / 2 2 3 / 1 4 / 2 2 3 / 2 1 / 2 2 3 / 2 8 / 2 2 4 / 4 / 2 2 4 / 1 1 / 2 2 4 / 1 8 / 2 2 4 / 2 5 / 2 2 5 / 2 / 2 2 5 / 9 / 2 2 5 / 1 6 / 2 2 5 / 2 3 / 2 2 5 / 3 / 2 2 6 / 6 / 2 2 6 / 1 3 / 2 2 6 / 2 / 2 2 6 / 2 7 / 2 2

Rail Freight Recovery Index: ESF

Last Updated: 6/3/2020 25

Download Slides at: www.FTRintel.com

Source: AAR, FTR Analysis by FTR | Transportation Intelligence™ of AAR Weekly Rail Traffic Report

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AUTOMOTIVE: COVID-19 Rail Freight Recovery Index

(100 = Full recovery to pre-pandemic volumes) Restart Phase Full Recovery Phase Shutdown Phase

20 40 60 80 100 120

1 / 1 1 / 2 2 1 / 1 8 / 2 2 1 / 2 5 / 2 2 2 / 1 / 2 2 2 / 8 / 2 2 2 / 1 5 / 2 2 2 / 2 2 / 2 2 2 / 2 9 / 2 2 3 / 7 / 2 2 3 / 1 4 / 2 2 3 / 2 1 / 2 2 3 / 2 8 / 2 2 4 / 4 / 2 2 4 / 1 1 / 2 2 4 / 1 8 / 2 2 4 / 2 5 / 2 2 5 / 2 / 2 2 5 / 9 / 2 2 5 / 1 6 / 2 2 5 / 2 3 / 2 2 5 / 3 / 2 2 6 / 6 / 2 2 6 / 1 3 / 2 2 6 / 2 / 2 2 6 / 2 7 / 2 2

Rail Freight Recovery Index: Automotive

Last Updated: 6/3/2020 26

Download Slides at: www.FTRintel.com

Source: AAR, FTR Analysis by FTR | Transportation Intelligence™ of AAR Weekly Rail Traffic Report

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SLIDE 27

Grain Carloads Exceeding 5 Year Average

Source: AAR, FTR Analysis

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20 22 24 26 28 30 32 34 36 38

  • 20%
  • 15%
  • 10%
  • 5%

0% 5% J u n

  • 1

9 J u n

  • 1

9 J u l

  • 1

9 J u l

  • 1

9 A u g

  • 1

9 A u g

  • 1

9 A u g

  • 1

9 S e p

  • 1

9 S e p

  • 1

9 O c t

  • 1

9 O c t

  • 1

9 N

  • v
  • 1

9 N

  • v
  • 1

9 D e c

  • 1

9 D e c

  • 1

9 J a n

  • 2

J a n

  • 2

F e b

  • 2

F e b

  • 2

F e b

  • 2

M a r

  • 2

M a r

  • 2

A p r

  • 2

A p r

  • 2

M a y

  • 2

M a y

  • 2

Thousands Y/Y %

N.A. Grain Carloads 4 Week Avg. Ending 05/30/20

Carloads Vs. Prev. Year Carloads 5 Year Average - 4 Week Mov Avg.

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However, Grain Mill Products Took A Hit

Source: AAR, FTR Analysis

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9 10 11 12

  • 15%
  • 10%
  • 5%

0% 5% 10% 15% 6/8/19 7/6/19 8/3/19 8/31/19 9/28/19 10/26/1911/23/1912/21/19 1/18/20 2/15/20 3/14/20 4/11/20 5/9/20 Thousands Y/Y %

N.A. Grain Mill Products Carloads 4 Week Avg. Ending 05/30/20

Carloads Vs. Prev. Year Carloads 5 Year Average - 4 Week Mov Avg.

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North American Rail Loadings Originated

Includes both Carload and Intermodal

6,000,000 7,000,000 8,000,000 9,000,000 10,000,000 11,000,000 12,000,000 2007.1 2007.3 2008.1 2008.3 2009.1 2009.3 2010.1 2010.3 2011.1 2011.3 2012.1 2012.3 2013.1 2013.3 2014.1 2014.3 2015.1 2015.3 2016.1 2016.3 2017.1 2017.3 2018.1 2018.3 2019.1 2019.3 2020.1 2020.3 2021.1 2021.3 2022.1 2022.3 2023.1 2023.3 2024.1 2024.3

Seasonally Adjust Quarterly Rail Loadings Originated

Rail Loads Forecast

Source: FTR freight-cast

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SLIDE 30

Source: FTR freight-cast

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U.S Rail Car Loadings Originated

Excludes Intermodal

3,000,000 3,500,000 4,000,000 4,500,000 5,000,000 5,500,000 6,000,000

2 7 . 1 2 7 . 3 2 8 . 1 2 8 . 3 2 9 . 1 2 9 . 3 2 1 . 1 2 1 . 3 2 1 1 . 1 2 1 1 . 3 2 1 2 . 1 2 1 2 . 3 2 1 3 . 1 2 1 3 . 3 2 1 4 . 1 2 1 4 . 3 2 1 5 . 1 2 1 5 . 3 2 1 6 . 1 2 1 6 . 3 2 1 7 . 1 2 1 7 . 3 2 1 8 . 1 2 1 8 . 3 2 1 9 . 1 2 1 9 . 3 2 2 . 1 2 2 . 3 2 2 1 . 1 2 2 1 . 3 2 2 2 . 1 2 2 2 . 3 2 2 3 . 1 2 2 3 . 3 2 2 4 . 1 2 2 4 . 3

Seasonally Adjust Quarterly Rail Loadings Originated

Rail Loads Forecast

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SLIDE 31

Source: FTR freight-cast

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FTR Railcar Capacity Utilization

51.8%

50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 Oct-20 Apr-21 Oct-21

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SLIDE 32

Source: FTR freight-cast

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N.A. Rail Car Economically Derived Demand (EDD) vs New Car Deliveries

  • 80,000
  • 60,000
  • 40,000
  • 20,000

20,000 40,000 60,000 80,000 100,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

N.A. Deliveries Adjusted EDD

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N.A. Total Rail Car Deliveries - Quarterly

13.2 15.6 14.5 14.7 10.8 2.7 3.0 4.1 4.5 4.9 5.8 7.1

2 4 6 8 10 12 14 16 18 2019.1 2019.2 2019.3 2019.4 2020.1 2020.2 2020.3 2020.4 2021.1 2021.2 2021.3 2021.4

N.A. Rail Car Deliveries Forecast

Units (000’s)

Source: FTR freight-cast; Deliveries history ties to RSI ARCI Committee

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N.A. Total Rail Car Deliveries

34 18 32 46 69 75 63 60 22 17 47 59 53 67 82 62 45 51 58 21 22

10 20 30 40 50 60 70 80 90 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

N.A. Rail Car Deliveries Forecast

Units (000’s)

Source: FTR freight-cast; Deliveries history ties to RSI ARCI Committee

34

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SLIDE 35

www.FTRintel.com

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SLIDE 36

Q&A

Type questions into the ‘Question’ panel and we will answer as many as we are able to.

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SLIDE 37

Rail’s Response to COVID-19

A Joint Webinar from FTR & RFC

Eric Starks

FTR Chairman & CEO

Todd Tranausky

FTR VP of Rail & Intermodal

David Nahass

RFC President

William Geiger

RFC Senior VP

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SLIDE 38

Q&A

Type questions into the ‘Question’ panel and we will answer as many as we are able to.

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§ A replay, along with slides, will be available by next Monday § Available to FTR subscribers

Available in the ‘On-Demand Videos’ section when logged in

§ Check your email to find out when it is ready § Feel free to follow up with our speakers – or anyone else on the FTR team § Phone: 888.988.1699 § Email: ftr@ftrintel.com

Thank You!

Replay & Slides

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Thank You

David Nahass President dnahass@railfin.com Will Geiger Senior Vice President wgeiger@railfin.com Railroad Financial Corporation 676 N. Michigan Ave, Ste 2800 Chicago, IL 60622 www.railroadfinancial.com 40