Railroad Car Rental & Leasing - Industry Market Research Report

October 2020 •
48 pages •
Report ID: 5103663 •
Format: PDF

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On track: Renewed economic growth and increasing shale oil and gas production are expected to drive demand for railcar leases

Abstract

Railroad Car Rental & Leasing

The Railroad Car Rental and Leasing industry exhibits a medium level of market share concentration, with the five largest players, Wells Fargo Rail, Trinity Industries Inc., Union Tank Company, CIT Group Inc., and GATX Corporation, dominating the industry. Over the five years to 2019, these operators have held a firm grip on their industry position through various acquisitions. Each player offers a unique fleet mix, including intermodal, tank, autorack, hopper and gondola cars.

Large companies expand through acquisitions

• Over the five years to 2019, large industry operators have further secured their status by completing small and large mergers and acquisitions. Most notable, Wells Fargo Rail, was created in 2016 when Wells Fargo purchased the majority of GE Capital Rail Services, merging it with Wells’ own First Union Rail Corporation. Through the acquisition, Wells purchased one of the oldest industry players, with GE operations beginning in 1907.

Price point and quality of service drive internal competition
• Industry operators compete on several factors, including rates, asset availability, reliability and reputation. To a very large degree, railcars have standardized, making them more commoditized. As a result, lessors have less opportunities to differentiate themselves and their assets, making lease rates the prime means by which to compete. Asset availability is another important variable in industry competition. Operators that do not have the right type or quantity of railcar run the risk of customers going elsewhere. Lastly, the companies that have sound reputation for customer services and reliability are better able to differentiate themselves and win new business. In most of these factors, the industry’s largest operators have a clear advantage in achieving economies of scale.

Companies operating in this industry rent or lease railroad cars to customers who move freight across railroads. Renting or leasing railcars enables downstream customers to avoid incurring the capital costs of purchasing a railcar from a manufacturer.

This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.

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