Bear Stearns report: Slow railcar demand may continue

Bear Stearns report: Slow railcar demand may continue A July 6 Bear Stearns report said railcar demand for cargo is slow and may continue to diminish over the next few months.
   'We spoke to one of our contacts at a large railcar-leasing firm about current weakness in the railcar market generally,' said the financial firm's Friday Freight report. 'Our contact believes we haven't seen the bottom in railcar demand, and he would look for further weakness in the coming months.
   'In fact, when talking about the equipment market our contact said now is the time in the industry when you 'batten down the hatches and hold on by your fingernails' until demand rebounds. More specifically, our contact said he continues to see excess inventory across almost all car types — although particularly in intermodal and coal cars — and he believes we can't see a sustainable rebound in demand until we've worked through most of that inventory.
   'Still, our contact said that going forward his biggest concern relates to the ethanol market,' the report continued. 'While demand for ethanol continues to be robust, our contact said he can't help but be concerned that the industry may have reached a point where too many cars are being ordered to support actual ethanol demand.' (For more about ethanol demand in the intermodal market, see June (American Shipper, pages 66-71.)