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Railcar Leasing Market

Railcar Leasing Market

Railcar Leasing Market By Railcar Type (Hopper Cars, Boxcars, Tank Cars, Flat Cars, Gondolas, Intermodal, Refrigerated Box Cars, Other Railcars), By End Use & By Region Forecast, 2021-2031

Railcar Leasing Market
FACT264MR
  • Feb-2022
  • List of Tables : 73
  • List of Figures : 112
  • 170 Pages
  • Automotive

Railcar Leasing Market Outlook

Railcar lessors (service providers that offer railcars on a rental basis for a specified duration of time as per a contract) provide a range of railcars and numerous associated services, such as repair and maintenance; and tax, insurance, and other financial services; which are managed by various asset management agencies. Railcar lease facilities are used to transport a plethora of goods, including metals and mining, oil & gas products, agri-produce & F&B products, temperature-sensitive goods, and numerous other industrial goods.

Demand for railcar leasing across the world is poised to increase over the coming years, with Asia Pacific leading the market share, followed by North America and Europe. Fact.MR published an exclusive forecast report in the railcar leasing market with forecasts for the period of 2020 to 2030. The foremost objective of this report is to pitch insights on the market scenario, demand generators, and technological advancements in this space. Gondolas, boxcars, and hopper cars are most sought-after as far as railcar leasing is concerned.

The report further proceeds with the market taxonomy, elaborating on key segments, along with visionary insights on the dynamics of the market, including the drivers, restraints, opportunities, trends, and pricing analysis.

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Why are Future Projections Even Better than Historical Trends?

From 2015 to 2019, the global railcar leasing market exhibited an impressive growth rate of 8%. Over the forecast period of 2020-2030, this industry is expected to show remarkable growth prospects. This is attributed to the fact that, industrialization is on the rise in a majority of high potential areas across the world.

Historically, industrial and automotive goods have been transported from one location to another using railway networks as one of the most reliable sources of transportation. Mounting growth of industrial sectors, especially in developing economies, along with the presence of established rail infrastructure is aiding market expansion across regions.

A standard freight train came at a cost of less than US$ 50,000 a decade earlier. Today, it stands between US$ 100,000 and US$ 150,000. This has been the main reason for a majority of consumers increasingly opting for railcar leasing instead of purchasing a newer railcar.

Moreover, railcars find application usage across various end-use markets, which is the prime reason attributing to the compounding growth of railcar leasing. Adding to this fact, multiple research and collaborations being undertaken by numerous key players to develop performance-enhanced railcars are also aiding market development.

  • For instance, VTG started testing its wagons developed under project m2 in collaboration with DB Cargo. These newly developed wagons utilize 3-6% lesser traction energy, produce 3-8dB lesser noise, and are incorporated with various digital enhancements.

Similarly, key railcar lessors are adopting intuitive strategies so as to capitalize on growing rail transport requirements in high-potential regions. Owing to these broad factors, railcar leasing demand is likely to increase substantially, expanding at a CAGR exceeding 9% throughout the 2020-2030 assessment period.

Why is Railcar Leasing Beneficial in the Long Run?

The most important factor for a shipper leasing its own railcars is greater control of the supply chain. Further, shippers are not subject to supply and demand difficulties of other users of the same railway type in case of railcar leasing.

Shippers manage transport capacity directly through the relation between their car fleet and production lines. Furthermore, demurrage costs are reduced to a greater extent when the lessor and asset management agency properly maintain a record of the leasing timeline and manage the railcars efficiently.

Moreover, private railcars sometimes act as storage units when the receiver is unable to handle delivery or facilitate the timely unloading of goods. However, it must be noted that, railcar leasing is a relatively long-term commitment, and is subjected to various regulations (generally extended for 30 years or more).

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Why are Sensors Integrated into Railcars?

Integrated sensor technology in railcars offers myriad of benefits, such as aiding in collecting information related to actual location tracking and status monitoring of temperature-sensitive goods. Further, railcar lessors can use the data to more accurately determine their position. Moreover, temperature sensors provide useful information on transportation conditions, which is beneficial in cold supply chain management.

Depending on the distance travelled and the state of the railway track, integrated sensors helps forecast and carry out maintenance on time. Owing to these factors, integrated sensor technology aids in properly managing the railcar fleet in the longer run.

Why are Many Countries Adopting the PPP Model for Expanding their Railway Infrastructure?

Railway privatization is on the rise, and the use of PPP (Public Private Partnerships) as models in the rail freight industry is being used in full by private companies. Governments across the world now select PPP for their infrastructure development to improve overall speed and efficiency.

For instance, the 2019 Indian finance budget proposed using the PPP model for faster development and completion of tracks, manufacturing of rolling stock, and development of freight services. Such government initiatives will provide a positive impetus to the growth of the railcar leasing market in the long run.

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What All is Managed When One Leases a Railcar?

When  users lease a railcar, they are legally and financially committed to follow certain regulations laid down by the lessor. Majority of leasing agreements are for long durations of 30 years and above.

Ever-increasing prices of these railcars have compelled consumers to lease them so as to save on maintenance costs associated. Their high prices make railcar leasing a viable option for end consumers in order to meet their transportation needs in the long run. Besides, asset management agencies offer important services such as online tracking, railcar maintenance, financial support, and consultancy services, all catering to the actual need of the consumer.

Further, leased railcars cannot be left anywhere, but need to be parked at appropriate locations. Also, railcars with undelivered commodities inside them require inspection before they are parked at storage yards. All these mentioned services are managed by associated asset management agencies of the lessor in accordance with the needs of the consumer.

Which End-use Markets Will be Growth Epicentres for Railcar Leasing?

Approximately seven-tenth of overall coal produced is utilized for electricity generation, and around four-fifth of overall coal deliveries are carried out by railcars. With growing coal production, need for gondolas will be high over the forecast period, which positively impact overall demand for railcar leasing services.

In addition to this, petrochemical and gas transportation is on the rise, and holds around one-fourth of the entire market share, as of 2019; expected to rise consistently owing to increasing oil & gas movement across regions.

railcar leasing market region by FactMR

Country Wise Analysis

Why Does the U.S. Lead the Railcar Leasing Industry?

The U.S. market accounts for the largest share in the entire world. This is due to the fact that the U.S. is home to the largest number of railcar owners, and cargo shipments via railcars are increasing at a notable rate. Owing to companies shifting their bases to the country, this regional market is expected to expand at a substantial CAGR of over 9% over the forecast period.

Why is Germany a Lucrative Market for Railcar Leasing?

The German market accounts for a sizeable share when it comes to railcars leased to customers. This is due to the fact that there is limited manufacturing capacity of railcars in the country. Further, increasing number of railcars are in need of replacement.

In addition, railroad customers are shifting from owing railcars to leasing them so as to reduce overall operating costs. Moreover, the German government’s initiative to modernise the country’s rail network will additionally support the growth of the railcar leasing sector in the country.

India Railcar Leasing Landscape

Among the Asia Pacific countries, the market in India is expanding at an increasingly high CAGR, owing to rising urbanization and infrastructure development activities being undertaken by the government.

For instance, the Indian Railways has made several efforts to purge public private participation in areas such as catering, wagon ownership, and leasing. In these areas that are capable of improving efficiencies and controlling costs, the current strategy is to maximize the use of private capital. The market in India is projected to expand at an impressive CAGR of close to 13% through 2030.

Category Wise Insights

Which Railcar Type Accounts for Highest Demand?

Considering all the types of railcars, boxcars capture a major share. This is due to the fact that, boxcars are used to transfer goods that need to be protected from changing weather conditions and precipitations.

However, hooper cars will witness a higher CAGR during the forecast period, owing to the fact that, these are utilised for increased flexibility with different types of cargo, including coal, gravel grains, and fertilizers.

What are the Key Strategies Adopted by Railcar Leasing Lessors?

The global railcar leasing space is moderately fragmented in nature. Major players account for around three-tenth of the market share, followed by regional players. Players have adopted innovative approaches of launching online platforms to track the real-time location of railcars, and are inviting industry-wide collaborations to strengthen online infrastructure.

In addition, targeted acquisitions have been performed to improve presence within prominent growing regions.

How Big is the Opportunity in Automotive & Components?

The automotive and components end-use industry has been a major contributor for railcar leasing during the past years. Automotive components, being larger in size and volume, present difficulty in transportation, which is overcome by railways. Owing to this fact, this segment is expected to progress at a high CAGR over the next ten years.

Which Region Offers Great Potential for Railcar Leasing?

The North American and European regions are important regions, each accounting for around one-fourth of the entire market share. These is facilitated by mounting number of railcar lessors who are based out of these two regions.

Owing to elevating industrialization activities by a majority of developing economies, a shift has been observed towards utilising railways as a prime source for transporting high-value goods. As such, Asia Pacific has remained the consistent growth epicentre when it comes to railcar leasing, which accounts for nearly one-third of the global market share as of 2019.

How is COVID-19 o Impacting the Railcar Leasing Market?

Natural disasters, including COVID-19, are unforeseen, and have affected all economies across the globe. Furthermore, COVID-19 has also resulted in impacting the demand for railcar leasing, on the back of imposition of lockdowns and disruption of goods movement.

Moreover, decreased demand and fluctuating industrial output have negatively impacted the market. Besides, railcar leasing is a very capital-intensive market. Liquidity, which indicates the availability of cash in the market, being the most critical feature of this industry, fell apart during the lockdowns.

It is anticipated that industrial output will rekindle to its previous volumes by the third quarter of 2021. Besides, unique challenges such as northern white frac and coal demand felt before COVID are further hindering overall market growth.

railcar leasing market competition by FactMR

Competitive Landscape

Aforementioned players rely on a blend of organic and inorganic strategies to deepen penetration across lucrative markets. These strategies include product launches, collaborations with key players, partnerships, acquisitions, and strengthening of regional and global distribution networks.

  • For instance, GATX, in 2020, announced the acquisition of Trifleet Holdings. This will give it access to 18,000 railcar containers worldwide, leased to customers in the gas, food, cryogenic, and pharmaceutical sectors. Further, GATX has also spent in expanding its maintenance facilities in Ware County, in 2018, which is planned to be completed in two phases.
  • VTG, in 2020, partnered with Nexxiot to utilize its temperature sensors in its wagons, and provide real-time monitoring of its high-value temperature-sensitive goods. Moreover, VTG acquired the operations of Slovakia’s Carbo rail in 2020, by obtaining a majority stake in the company, which was aimed towards improving its operational capability in the European market.

Similar recent developments related to companies operating in the railcar leasing market have been tracked by the team at Fact.MR, which is available in the full report.

Report Scope

Attribute

Details

Forecast Period

2021-2031

Historical Data Available for

2016-2020

Market Analysis

US$ Mn for Value

Key Regions Covered

  • North America
  • Latin America
  • Europe
  • Asia Pacific
  • Middle East & Africa

Key Countries Covered

  • U.S.
  • Canada
  • Mexico
  • Brazil
  • GermanyItaly
  • France
  • U.K.
  • Spain
  • China
  • Japan
  • India
  • GCC
  • Israel

Key Market Segments Covered

  • Railcar Type
  • End Use
  • Region

Key Companies Profiled

  • VTG
  • GATX
  • CIT Group
  • Chicago Freight Car Leasing Co
  • ULTX
  • TOUAX Group
  • Trinity Industries, Inc.
  • Wells Fargo Rail
  • Beacon Rail Leasing
  • SMBC Rail Services
Customization & Pricing

Available upon Request

Key Segments Covered

  • Railcar Type

    • Hopper Cars
    • Boxcars
    • Tank Cars
    • Flat Cars
    • Gondolas
    • Intermodal
    • Refrigerated Box Cars
    • Other Railcars
  • End Use

    • Agri-produce, Forestry and F&B Products
    • Mining Products
    • Petrochemicals & Gases
    • Automotive & Components
    • Energy Equipment & Products
    • Rail Products
    • Industrial Goods
    • Construction Goods
  • Region

    • North America
    • Latin America
    • Europe
    • Asia Pacific
    • Middle East & Africa

- FAQs -

The global railcar leasing is anticipated to surpass US$ 14.2 Bn in 2020, and the market is poised to expand at a CAGR of more than 9% through 2030.
Boxcars capture a major share, equivalent to the one-fourth of the global railcar leasing market, and are set to create US$ 6.4 Bn opportunity over the next ten years
Asia Pacific is set to dominate market revenue in 2021, and is expected to gain 497 BPS in its market share by 2030 over 2020.

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