Do I have your attention now?
Although just about every railcar type is next to impossible to find we continue to receive requests to lease or buy gondolas every week. Our list of lessees and buyers continues to grow. Gondolas are not just scarce, availability doesn't exist. What has caused this and what can we do about it?
In my blog on June 20th, I outlined some reasons for the current failure in rail service which included PSR and the pandemic. Both of these qualify as causes for the current gondola shortage.
As noted in that article, PSR is a contributing factor to the drop in rail service. Fewer switches, longer transit times, and longer first mile and last mile service results in fewer system cars available.
This not only affects system cars. Turnaround times on private cars also increased. One goal of PSR was to improve cycle times on private cars to allow lessees to actually reduce fleet size. However, all the contributing factors including PSR have resulted in the need to increase, not decrease, fleet size.
Additional cuts to already-short staffing due to the pandemic and very long rehire/training times have combined to exacerbate an existing shortage and make it nearly unworkable at times.
High scrap rates, even record prices, encouraged the depletion of both carrier and private fleets.
Many cars that could be used are in storage. When the forecast for demand shows a decline (or the promised benefits of PSR suggest fewer assets are needed) the Class 1 carriers adjust their fleet size by moving some cars into storage. Once in storage, it takes both considerable time and justification to pull them back into service.
No private car lessee or owner wants to turn back from a lease or sell any railcars. Normally due to shifts in business or other reasons, lessees will turn back cars when the lease expires. However, due to all of the above reasons, no one wants to let any cars go because everyone is working short of equipment. Likewise, car owners don't want to sell any cars. Normally, there is some turnover of cars in the marketplace. We are in a unique time where no one is turning cars over.
In one sense, the railcar marketplace is basic supply and demand. Supply has been impacted by many factors as listed above. Demand is very high, driven by many factors with a supply totally inadequate. What can be done?
Some new cars are being built. Mostly these are available starting in 2023. That does create some supply.
Manage your shipments in system cars aggressively. Paying detailed attention to every shipment and calling out the carriers for every failure will help.
Especially for those with private cars managing them very carefully can help. You can't control the carrier, but you can monitor and improve the utilization of your asset with careful management.
Be in the marketplace every day looking for available equipment and strike when the iron is hot.
The average shipper is in no position to follow the above guidelines. This is where Iron Horse Logistics Group can make all the difference. We are in touch with new builds and can monitor and manage every shipment for you. We'll be on top of every move of every car in your fleet to improve utilization and enter the marketplace every day to find the available equipment you need. Are you getting all the railcars you need? If not, send me an e-mail at
email@example.com or call me at 330-222-8130. We cannot control what the carriers do, but we can make a difficult situation much better for you by making logistics easier for you. Call me today.