Followers of the rail industry have likely come across discussions recently about the make-up of the boxcar fleet in North America and how it serves a broad customer base. The total count of boxcars in the North American fleet was approximately 109,000 at the end of 2015. Those boxcars, however, can be divided into two distinct categories that are relevant for equipment owners and for shippers. There is the older, smaller fleet of boxcars and there is the newer, larger fleet of boxcars.
There are about 74,000 older, smaller boxcars, which share important characteristics. Most of these boxcars—50,000 of them—are older (ages 35 years and above), smaller (about 50 feet in length) and limited to carrying lighter weights (gross rail load of 220,000 or 263,000 pounds).
Then there’s the other portion of the boxcar fleet.
There are about 35,000 newer, larger boxcars, which also share important characteristics. Most of these boxcars— 25,000 of them—are newer (less than 25 years of age), larger (typically about 60 feet in length), and capable of carrying heavier weights (gross rail load of 286,000 pounds).
"Missing Decade" Will Shape Boxcar Retirement Trends
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Railinc Sr. Analyst David Humphrey, center, |
In between these two portions of the boxcar fleet is something of a missing decade. If we examine just boxcars that have ages from 24 years to 32 years, that spans a nine-year window—roughly a decade.
Within that period, there are fewer than 2,000 boxcars in the North American fleet, and all of those are the older, smaller boxcars. That is, the very few boxcars in that nine-year age group represent the last and youngest of the previous generation of boxcars that were added to the fleet two or three decades ago. The outcome: There will be small boxcars retiring from the fleet in the next 15 years, followed by about 10 years with very few boxcars retiring, before the retirement of large boxcars begins in large quantities in about 25 years.
These differences in physical characteristics between the older, smaller boxcars and the newer, larger boxcars can be very important. Some shippers are limited by weight in how much lading can be placed in a boxcar. (Think about shipping gold bars.) They reach the weight limit on the boxcar before reaching the limit on cubic capacity.
Other shippers are limited by cubic capacity in how much lading can be placed in a boxcar. (Think about shipping chicken feathers.) They reach the interior space limit on the boxcar before reaching the weight limit.
But whether the shipper reaches the weight or the cubic-capacity limit first, those older, smaller boxcars consistently carry less lading than the newer, larger boxcars. And while older, smaller boxcars are retiring from the fleet, the rate of addition of newer, larger boxcars has been such that the overall capacity of the boxcars fleet has decreased significantly in recent years.
Second Quarter Boxcar Additions Outpaced 2014, 2015 Combined
There is, however, some indication that a change is potentially upon us.
A few hundred new boxcars have been added to the fleet this year. In fact, more new boxcars were added during the second quarter of 2016 than were added in all of 2014 and 2015 combined. And the new boxcars that are being added are typically 60 feet in length with a gross rail load of 286,000 pounds.
While it is too soon to call this a trend, it is something of a bright spot in an otherwise challenging year. It certainly warrants monitoring in the upcoming months, even if you’re not shipping gold bars or chicken feathers.
—David Humphrey Ph.D.
David Humphrey Ph.D. is a data scientist and senior analyst at Railinc. Each year, at the Rail Equipment Finance Conference, he presents detailed analyses of demographic data on the North American railcar and locomotive fleets. Read a Q&A with Humphrey and download his 2016 railcar and locomotive fleet reports for free.