Railinc’s senior data scientist David Humphrey traveled to La Quinta, California from March 3-6 to present his annual railcar and locomotive reviews at the Rail Equipment Finance Conference. Corporate Communications sat down with David post-conference to delve into some of the most significant takeaways from this year’s data and conference.
Corporate Communications (CC): What were some of the important trends that you touched on when presenting this year’s reviews?
David Humphrey (DH): There’s been a continuation of covered hoppers being added to the fleet, and in two subfleets — grain covered hoppers and box cars — we’re seeing older, smaller cars move out as newer, larger cars move in. C-114s are the new, 5,000- and 6,000-cubic-foot grain covered hoppers replacing older, 4,500- and 4,750-cubic-foot C-113s. There are tens of thousands of these older grain covered hoppers that are in the last decade of its life and as they go away, they’ll need to be replaced. A similar situation is unfolding with boxcars; older, 50-foot boxcars are being replaced by newer 60- or 70-foot boxcars. Also, the number of DOT-117 tank cars in the fleet is continuing to grow.
CC: Are you able to make any predictions about the future fleet based on this year’s data?
DH: Both myself and other presenters believe that there are too many C-112 small covered hoppers in the fleet; these hoppers transport sand and cement and have been affected by the recent downturn in the sand business, due to new fracking practices. Wisconsin white sand is generally regarded as the best sand in the world, but it usually needs to travel long distances by rail from Wisconsin to the fracking site. However local brown sand, usually sourced within 100 miles of the fracking site, is plentiful, cheaper and can travel short distances by truck. As drilling engineers move towards using local brown sand in place of Wisconsin white sand, I think we’ll find that there’s been an overbuild of C-112s in the past few years. So, I predict that we’re probably going to see a slowdown there.
CC: How do you feel Railinc, and these reports, add significant value to the Rail Equipment Finance Conference?
DH: Railinc is responsible for the Umler® system, which is the one database for which all railcars used in interchange service must be registered to. We have ready access to this data, plus we work with this data all of the time. Other organizations may receive parts of files from time to time, but still, they aren’t spending as much time with the data as we are. So, Railinc is able to exclusively offer a comprehensive view of a dozen different subfleets, presented in a consistent view year over year, to attendees.
CC: What were some other general topics touched on by speakers at this year’s conference?
DH: There was a good bit of conversation surrounding precision scheduled railroading. There’s a concern that since precision scheduled railroading will allow the railroads to do more with less equipment, it’ll lead to an increase in the velocity in the network, which will bring about a reduction in both locomotives and railcars needed out. There were also a few comments about the coal business — specifically predictions that it will continue to steadily decline and that more coal cars will leave the fleet for the scrapyards.
CC: What was one of the most interesting takeaways from the conference?
DH: CNGmotive shared that it’s currently in the processing of building a locomotive tender — the tender delivers fuel to the locomotive — that’s going to have compressed natural gas on board. The company claims that this will change the industry’s preferred fuel source from diesel to compressed natural gas over the next decades or two. It’s scheduled for operation this summer. If successful, it would make the price of fuel around 40 cents per diesel gallon equivalent; so, whether you’re paying four dollars, three dollars, even two dollars for your diesel today, dropping that to forty cents is still a good deal. It’s also a better alternative to liquified petroleum from a safety standpoint. They’ve got a whole list of reasons why compressed natural gas would be a better choice and they claim it’s just an eventuality that we’re waiting for.