5 Tank Car Manufacturers to Benefit from Crude-by-Rail

5 Tank Car Manufacturers to Benefit from Crude-by-Rail

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As the U.S. gears up to become the number one oil producer in the world by 2020 on the back the shale gas revolution, tank car manufacturers are poised to benefit as more crude oil gets transported by railway to take advantage of cheaper prices in the midcontinent United States. Tank cars are specialized rail cars designed to haul liquefied freight and are manufactured by a small select group of companies.

Given that current crude-by-rail volumes are approximately 500,000 to 600,000 barrels a day, while the U.S. produces 6.6 million barrels a day (and U.S. refineries refine 14.8 million barrels per day), the potential for railway companies to increase its exposure to the crude oil transportation business can be exponential. The current consensus is that the lack of available tank cars is causing a bottleneck in the crude-by-rail supply chain, while other impediments to growth include the lack of offloading terminals to deliver the product, absence of rail access to origination sites, and the need for coastal refiners to re-configure their plants to be able to process heavier crude that is produced in the U.S. midcontinent.

Read more: Are Tank Car Stocks Breaking Out or Breaking Bad?

FTR Associates data through the Bloomberg service show that there is currently a backlog order of roughly 47,000 tank cars for the tank car manufacturers. In the third quarter of 2012, 4,500 tank cars were delivered and the time for an order to be processed and the tank cars to be manufactured has now lengthened to around 15 – 18 months.

A strong signal that the crude-by-rail story is developing can be seen by an increasingly number of refiners choosing to own or lease these tank cars directly rather than leaving it to the rail companies. For example, Valero Energy Corp (VLO), a mid-size U.S. refiner, announced on January 15 this year that they will be buying 2,000 additional railcars in order to increase rail shipments of inland crude not served by pipelines. This brings its current fleet of tank cars to 9,000 and management hopes that the additional capacity will help ship more of the prolific Eagle Ford crude to its refineries.

Furthermore, Phillips 66 (PSX), another refining company in the U.S. announced plans earlier in 2012 to purchase 2,000 railcars for the same purpose. This increasing demand for tank cars means that delivery of tank cars grew significantly in 2012 to approximately 18,000 deliveries, and current backlog suggest more than 23,000 deliveries of tank cars will be completed in 2013. This is in comparison to the less than 10,000 tank car deliveries in 2010 and 2011 and the approximately 20,000 tank cars currently transporting crude oil on railways. 

There are very few companies on the public market that is exposed to tank car manufacturing, with one of the main ones being Greenbrier Companies (GBX). On January 7, 2013, the company announced that it has received orders for 4,200 rail cars valued at over US$430 million with 1,250 of them being tank cars. The company now expects to deliver 13,000 rail cars in 2013 with a backlog of 9,700 rail cars valued at US$1.1 billion. Greenbrier was also subjected to an acquisition offer by Carl Icahn and American Railcar Industries Inc. (ARII) with the bid on the table being $22 a share. The Board rejected the offer in December 2012 as not being sufficient and Icahn has since sold off most of his stake from 9.9% to 3.4% of the company. As a result, shares of Greenbrier has plummeted back to around $17 a share – a 22% discount to the price at which a famed investor was willing to pay.

Here is a list of publicly listed rail and tank car manufacturers:

1. Greenbrier Companies (GBX, Earnings, Analysts, Financials): Engages in the design, manufacture, and marketing of railroad freight car equipment in North America and Europe. Market cap at $488.33M, most recent closing price at $17.96.
 

2. American Railcar Industries, Inc. (ARII, Earnings, Analysts, Financials): Designs, manufactures, and markets hopper and tank railcars in North America. Market cap at $754.94M, most recent closing price at $35.36.
 

3. FreightCar America Inc. (RAIL, Earnings, Analysts, Financials): Through its subsidiaries, manufactures, rebuilds, repairs, sells, and leases freight cars used for hauling coal, other bulk commodities, steel and other metals, forest products, and automobiles primarily in North America. Market cap at $296.39M, most recent closing price at $24.74.
 

4. Westinghouse Air Brake Technologies Corporation (WAB, Earnings, Analysts, Financials): Provides technology-based equipment and services for the rail industry worldwide. Market cap at $4.28B, most recent closing price at $89.40.

 

5. Trinity Industries Inc. (TRN, Earnings, Analysts, Financials): Provides products and services to the industrial, energy, transportation, and construction sectors primarily in the United States, Canada, Mexico, the United Kingdom, Singapore, and Sweden. Market cap at $2.97B, most recent closing price at $37.68.

 


(List compiled by SiHien Goh)

 

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58 Responses to “5 Tank Car Manufacturers to Benefit from Crude-by-Rail”

  1. Raw Tucker says:

    We all know the crude oil and other materials like: coal are transport through Rail. The Railway department helping in this way to the automobile industries. Because the maximum amount of oil transportation will possible through the Railway transportation. Almost 50,000 to 60,000 barrels per day. So the Railway transportation is the most essential mode of transportation of crude oil.

  2. Have a nice outlook about the crude oil and transportation. After view your post I know that about the American Railcar Industries and FreightCar America which is really valuable able to me.

  3. Tank cars are special cars that are used to transport crude oil and only a few companies manufacture these cars. But the lack of tank cars have created problem of transportation of crude oil by railways. As US is emerging as the number on producer of crude oil so it will be a problem in future. I think government must increase the manufacturing target of tank cars and encourage these companies.

  4. Maris says:

    Tank car is the special invention of the manufacturing companies which lead to transport crude oil. Mostly we used to transport the crude through rail. But now the technology changing and also every sector want some saving .So these manufacturing companies helps the government to save money from transport sector of rail.

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  5. Richardson says:

    Hello Sir. The following is the two sellers procedure for Bonny light crude oil . Please kindly go through if you have buyers for this we can end good commission.

    FCO ON BONNY LIGHT CRUDE OIL (BLCO)

    DESTINATION: CIF

    We are capable of supplying/Shipping two Million (2,000,000) barrels +/-05% for 12 Months, with possible rolls and extension at both parties discretion.

    Quality is BLCO (Nigeria Bonny light crude oil) export standard with below specification.

    Specific Gravity at 150c, kg/1 ASTMD1298/P 0.8397-9.8498

    API at 60 Degrees F ASTM Table 51 34 – 37

    Salinity ASTMD 4006/1P 358 4.7P.T.B @ 60 Degrees F

    Color Dark Brown

    BS & W Content [Vol. %] ASTMD 473/1P 53 0.25 Average

    Sulfur %WT ASTMD 0.14% wt

    Pour Point Degrees F ASTMD 97/1P.15 40º[F] Degrees F

    Water Content: 0.2% Vol. Max

    REIB Vapour Pressure: 6.52PSIG

    DESTINATION:

    CIF

    PRICE:

    The price for each Barrel of Nigeria Light Crude Oil delivered out-turned barrels shall be Dated Brent” on the date of Bill of Lading as published by McGraw Hill market, Gross discount of $10.00USD per barrel, $6.00 Net to Buyer, $4.00 to Brokers as follows; ($2.00 TO SELLER’S AGENT & FACILITATORS, $2.00 TO BUYER’S AGENT & FACILITATORS.)

    PROCEDURE: (CIF)

    1. Seller signs and seals the contract and dispatches to the Buyer in form of email.

    2. Buyer countersigns the contract and dispatches a duplicate copy to the Seller in form of e-mail. Buyer and Seller deposit same at their respective Banks.

    3. Seller releases to Buyer his Authority to Sell (ATS) inform of POP

    4. Buyer in return raise Stand By Letter of Credit (SBLC) OR MT103/23 to Seller’s account covering the total product

    5. Seller upon confirmation of the instrument via his bank nominates a vessel into the terminal for loading in Buyer’s name; and Vessel Loads.

    6. Upon completion of loading, Seller’s loaded vessel issues NOR/ETA to Buyer’s nominated port of discharge.

    7. Vessel sails to Buyer’s port of discharge for Q & Q.

    8. Upon arrival of Seller’s loaded vessel at the Buyer’s discharge port, Buyer conducts quantity and quality (Q&Q) inspection at Buyer’s expenses before discharge is done.

    9. Sellers Bank presents the loaded shipping documents to Buyers Bank for payment.

    10. Buyer’s Bank releases payments, against cargo documents, via SWIFT WIRE TRANSFER from Buyers bank to Sellers bank account.

    11. Seller discharges the product into Buyers port of discharge.

    Yours Truly
    Richardson

    Email….[email protected]

  6. Herm59 says:

    Really it is a good blog give us a brief ideas about car and railway. These two are co related each other. Gas cars have a limitation in market but it financially quite sound than fuel gas. Gas is the common factor for make running the gas car. For this gas filling stations are very essential. But the gas stations are limited in all over the world. Gas always be natural, it has no doubt. Many of people don't prefer to go for a gas car due to lack of its filling station and mileage problem. The service parts of the gas cars are limited.

  7. Selvin says:

    It is a shocked invention of the car and railway sector about the tank car. These two are proportional to each other. Tank car mostly runs in gas rather than crude fuel. Crude fuel cost increasing in such a rate that it creates problem for the people to ride a car. But now the technology changing and also every sector want some saving .So these manufacturing companies helps the government to save money from transport sector of rail. For this car also we need gas filling stations to fill your tanks. Also this type of car creates less amount of smog.

  8. Richardson says:

    Hello Sir/Madam. The following is the two sellers procedure for Bonny light crude oil.

    FCO ON BONNY LIGHT CRUDE OIL (BLCO)

    DESTINATION: CIF

    We are capable of supplying/Shipping two Million (2,000,000) barrels +/-05% for 12 Months, with possible rolls and extension at both parties discretion.

    Quality is BLCO (Nigeria Bonny light crude oil) export standard with below specification.

    Specific Gravity at 150c, kg/1 ASTMD1298/P 0.8397-9.8498

    API at 60 Degrees F ASTM Table 51 34 – 37

    Salinity ASTMD 4006/1P 358 4.7P.T.B @ 60 Degrees F

    Color Dark Brown

    BS & W Content [Vol. %] ASTMD 473/1P 53 0.25 Average

    Sulfur %WT ASTMD 0.14% wt

    Pour Point Degrees F ASTMD 97/1P.15 40º[F] Degrees F

    Water Content: 0.2% Vol. Max

    REIB Vapour Pressure: 6.52PSIG

    DESTINATION:

    CIF

    PRICE:

    The price for each Barrel of Nigeria Light Crude Oil delivered out-turned barrels shall be Dated Brent” on the date of Bill of Lading as published by McGraw Hill market, Gross discount of $10.00USD per barrel, $6.00 Net to Buyer, $4.00 to Brokers as follows; ($2.00 TO SELLER’S AGENT & FACILITATORS, $2.00 TO BUYER’S AGENT & FACILITATORS.)

    PROCEDURE: (CIF)

    1. Seller signs and seals the contract and dispatches to the Buyer in form of email.

    2. Buyer countersigns the contract and dispatches a duplicate copy to the Seller in form of e-mail. Buyer and Seller deposit same at their respective Banks.

    3. Seller releases to Buyer his Authority to Sell (ATS) inform of POP

    4. Buyer in return raise Stand By Letter of Credit (SBLC) OR MT103/23 to Seller’s account covering the total product

    5. Seller upon confirmation of the instrument via his bank nominates a vessel into the terminal for loading in Buyer’s name; and Vessel Loads.

    6. Upon completion of loading, Seller’s loaded vessel issues NOR/ETA to Buyer’s nominated port of discharge.

    7. Vessel sails to Buyer’s port of discharge for Q & Q.

    8. Upon arrival of Seller’s loaded vessel at the Buyer’s discharge port, Buyer conducts quantity and quality (Q&Q) inspection at Buyer’s expenses before discharge is done.

    9. Sellers Bank presents the loaded shipping documents to Buyers Bank for payment.

    10. Buyer’s Bank releases payments, against cargo documents, via SWIFT WIRE TRANSFER from Buyers bank to Sellers bank account.

    11. Seller discharges the product into Buyers port of discharge.

    Yours Truly
    Richardson

    Email….[email protected]

  9. Selvin says:

    Innovation in mind comes in mind very frequently but some people likes to do it in a better way that can give success two them and also it should helps the people in better way. Mostly people like to invent many things in business to do a better task. In every sector profit and loss is there. In the same way the invention of tank car is very popular and also helpful to the railway sector.

  10. James Albert says:

    Really this is a good blog. This is showing us how cars and railways are interlinked. The crude oil and other materials like: coal are transport through Rail. Tank cars are special cars that are used to transport crude oil and only a few companies manufacture these cars.

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  13. Paul Adums says:

    Rail tanker and Tank car are very essential for the crude oil transportation. The railway department is very much responsible for the transportation of these crude oils. Raw materials, crude oils, Coals are easily transport through the train services. The railway department doing the most important work by doing this. These things are very necessary for the energy formation. <a href="http:// http://www.swedishmotorautorepair.com/About_Us.html“ target=”_blank”>Land Rover Repair Santa Monica

  14. David Allen says:

    Generally crude oil transports through rail, but now car tanker is going to utilize such position. Tank cars are specialized rail cars designed to transport crude oil manufactured by a small select group of companies. There are very few companies on the public market that is exposed to tank car manufacturing, with one of the main ones being Greenbrier Companies. Government should encourage more companies to produce car tank for better transportation.
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  15. I wish we could have an organised railway system in our country (Slovenia- Europe) where everything is hitting the roads, and the trains are just moping around. We have a great geopgraphical position and everything but nooooooo lets jamm up the streets all the freakin time!

  16. Danish Rich says:

    Actually now-a-days cars are having high price likewise fuels are also. So from this post I came to know that U.S tries to be the number one in oil production in the coming 2020. So U>S's aim is to provide fuel in cheaper price then others so to decrease the price of the fuel transportation charge of fuel is a major one. So, it manufactured tank cars to take its benefit by transporting more crude oils by railway. This is a really great strategy by U.S to provide cheaper fuel for our cars. .

  17. Warren Sharp says:

    Such latest technologies and introducing day by day and i think it is very good for new era as every thing is getting better now a days. so i would like to say keep it up

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  21. Evens says:

    transportation of car manufacturing materials by train is really good. Both car and train are transporting vehicles which are facilitated our journey with in a suitable cost rather than air line. After saw this blog it was confirmed that customer’s feedback also taken into consideration. It is good. By this customers got satisfaction and next time they can get their wanted products in market. The manufacture industries and the service centers are also got inspiration for the better one and make popular. In such process communication gap disappear and primary goal of a business strategy achieved.
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  22. Rekel says:

    Manufacturing of tank car by rail is a unique invention of railway center. Rather than to transport materials in train we are transporting it in tank car. This is just like the fuel car but it is large in size. Rail tanker and Tank car are very essential for the crude oil transportation. The railway department is very much responsible for the transportation of these crude oils. Mostly people like to invent many things in business to do a better task. In every sector profit and loss is there. In the same way the invention of tank car is very popular and also helpful to the railway sector. But the gas stations are limited in all over the world. Gas always be natural, it has no doubt.
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  27. Only few companies on the public market today that is exposed to tank car manufacturing.Tank car manufacturers take advantage of the cheaper price if more crude oil gets transported by the railway.

  28. khan lKöşe says:

    Nice to see your blog, Good info. Keep posting new stuff. Will be visiting this site frequently.

  29. Rian Vettory says:

    Generally Tank Car carry coal, which is used by the automotive industries and so on. This achievement of Tank Car Manufacturers will certainly lead them to a high growth. Tank car will be very helpful for the transportation of crude oil. The railway department plays a major role in this. This plays a vital role in the formation of Energy.

  30. Such latest technologies and introducing day by day and i think it is very good for new era as every thing is getting better now a days. so i would like to say keep it up

  31. vedeževanje says:

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  32. Edz says:

    There has been a shortage of cars ever since crude on rail picked up.

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  34. Very interesting. I didn't know that shale was this huge… I wonder what kind of impact the US being the biggest oil producer in 2020 will have on the world markets? I guess we'll have to wait and see.

    Regards,
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  41. Elizabeth says:

    FTR Associates data through the Bloomberg service show that there is currently a backlog order of roughly 47,000 tank cars for the tank car manufacturers. In the third quarter of 2012, 4,500 tank cars were delivered and the time for an order to be processed and the tank cars to be manufactured has now lengthened to around 15 – 18 months http://ishipcar.com/

  42. thanks for all this great and valuable informations …

  43. Don't forget about all of the little guys too that make the pieces the tank cars are made of.

  44. Always great to read some serious rail industry news – thanks!

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    The Board rejected the offer in December 2012 as not being sufficient and Icahn has since sold off most of his stake from 9.9% to 3.4% of the company. As a result, shares of Greenbrier has plummeted back to around $17 a share – a 22% discount to the price at which a famed investor was willing to pay.

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