Some of this is due to tank cars in storage on purpose with crude oil waiting for prices to increase. Nominal good business conditions might expect an overall car storage rate in the 8% to 12% range...
Here’s an extract of market view as published today by SFG (Susquehanna Financial Group) based on their independent view of the AAR collected data.
As of June 1, there were more railcars sitting idle than at the peak of the 2009 recession (551K vs. 546K). That’s roughly 1/3 of the total fleet. This level “could be this cycle’s peak storage (and trough utilization)”...
Why the peak? Because of how the methodology behind the data is calculated
— “stored” = 60 days idle
Therefore, the June 1 fleet snapshot includes extreme shutdown months of April-May.
“That said, rail equipment is a late-cycle business with still deteriorating fundamentals”, and SFG reiterates its high-conviction view “that a railcar order recovery in 2H20 and earnings recovery in 2021 is extremely unlikely.“
What’s your market view of the data suggest?