The fundamentals of the freight railroad business in the U.S. are extremely strong and I regard the industry as a secular growth story. A railroad can move a ton of freight for about 450 miles on a single gallon of diesel fuel making rail far more energy-efficient than long-haul trucks. In addition, America’s increasingly congested roadways make transporting goods by truck over long distances a less reliable option.
US railroad freight traffic plummeted in the latter half of the 2007-09 recession but has continued to bounce back ever since and traffic showed no signs of slowing during last year’s economic soft patch. According to data from the Association of American Railroads (AAR), total freight carloads in 2011 increased 2.2 percent compared to 2010, led by a 20.5 percent jump in shipments of metallic ore and 11.1 percent in petroleum products shipped by rail. December 2011 brought one of the year’s strongest gains with total freight carloads up 7.3 percent compared to the same month one year ago.
In the most recent quarter, Greenbrier reported it delivered 3,300 railcars up from 1,050 in the same quarter one year ago. Total backlog of railcar manufacturing orders reached 13,300 cars up from about 8,100 a year earlier.