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The results of the survey “are a net neutral for new railcar demand in the next 12 months,” Elkott says. Cowen considers four key metrics: (1) The percentage of “all participating shippers” who will or may order railcars. (2) The conviction level about ordering (the split between “yes” and “maybe”) among this group. (3) The percentage of “same shippers” (which compares only the responses of shippers who participated in both the 1Q18 and 2Q18 surveys) who will or may order railcars. (4) The conviction level about ordering (the split between “yes” and “maybe”) among the group. The first, second, and fourth metrics improved in 2Q18, while the third metric deteriorated.
“Shippers expect to place smaller orders relative to our prior (1Q18) survey,” notes Elkott. “Among the shippers who said they don’t plan to order railcars in the next 12 months, the percentage who said it is because they don’t have incremental equipment needs increased.”
About 55% of all shippers surveyed said they “will” or “may” order railcars in the next 12 months, a negligible increase of 1% from Cowen’s 1Q18 survey. Of these, 59% said “yes,” they plan to place orders (up from 54% in 1Q18), while 41% said “maybe” (down from 46% in 1Q18). “This points to a somewhat increased level of certainty about ordering relative to 1Q18 among all participating shippers,” Elkott says.
About 45% say they do not plan to order railcars, a negligible decrease of 1% compared to the prior-quarter survey.
On a same-shipper basis, “the results look a little less encouraging,” notes Elkott. About 47% in 2Q18 said they will or may order railcars, compared to 68% in 1Q18. Of these, 75% said they plan to place orders (compared to 40% in 1Q18), while 25% said maybe (compared to 60% in 1Q18). Roughly 53% do not plan to order railcars, compared to 32% in 1Q18. “This points to an increased level of certainty about ordering within the same shipper group relative to last quarter.”
Cowen continues to favor railcar component supplier Wabtec, and carbuilders Trinity, ARI and Greenbrier, with “solid orders” expected from the latter two for 2Q18, driven partly by crude oil tank car demand.
The post Railcar demand “net neutral”: Cowen survey appeared first on Railway Age.
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