By Grace Renderman, Associate Editor
Many companies in the rail industry have seen an increase in demand for their products and services as the world continues to recover from COVID-19, including rail vehicle repair companies.
Calls for mobile auto repair services have gained traction and previously idle tank cars are being brought back into service as more customers take advantage of state-mandated qualifying services. Federal law requires all tank car owners to qualify the cars at least once every decade, even if a car is not in service for a period of time.
Demand for specialty equipment has also increased, possibly due to delayed investments, says Dan Mack, executive vice president of marketing, sales and business development for Northern Plains Rail Cos., one of two auto repair companies contacted by Progressive Railroad.
“Companies [are] probably trying to catch up a bit. Some of this may have been a hiatus during the uncertain time of the pandemic,” he says.
Northern Plains serves customers in the upper Midwest, most of whom are based in the surrounding region and some in Canada, Mack says. The company offers a comprehensive service portfolio, including freight wagon service (particularly for customers from the agricultural sector), tank wagon qualification and mobile repairs.
Northern Plains operates three stationary repair shops and three mobile repair units, although the company plans to expand its mobile operations as that part of the business is growing the fastest, Mack says.
“To be able to provide mobile services to where the car is instead of bringing the car [to the shop]. There are all sorts of economic benefits,” he says. “You can react faster to mechanical problems and you save time and money during transport. We see that as an opportunity for growth.”
Outside and inside
Demand for indoor and outdoor maintenance is also picking up, says John Ward, senior vice president of repair services at American Industrial Transport Inc. (AITX). Some of the company’s services include car cleaning, interior trim and exterior paint installation, and car renovation, modification, and remodeling.
AITX has 17 locations in the South and Midwest and a repair facility in Sarnia, Ontario. The company is in “strategic growth mode” as it continues to expand not only its services and capabilities but also its market reach, Ward says. The Company is in the process of opening a new tank car facility on a CN Mainline in Brookhaven, Mississippi, which will be AITX’s first foray into the state of Magnolia.
“[The facility is] one of the few certified tank car facilities on the Chicago-to-the-Gulf route,” says Ward. “There are refineries and chemical companies in New Orleans, Baton Rouge, Mobile and Houston. This is a strategic location.”
As they continue to work through an order backlog, Northern Plains and AITX plan to better connect with more Class Is, whose recent service reliability issues have pressured rail equipment markets.
“It’s no secret that there have been some service challenges,” says Mack. “We think the railroads will figure it out, but it will take a while. This keeps high-capacity fleets running.”
The tight labor market is also a factor affecting the number of skilled and unskilled workers, Mack adds. In addition, employee retention was difficult.
Additionally, bottlenecks in the supply chain have impacted AITX, Ward says. Late deliveries of interior coating and trim components make it difficult to complete orders on time and pull cars out of the shop to make room for new ones, he says. Nevertheless, AITX has managed to improve processing times.
“There are a number of reasons for that, although we’ve had supply issues,” says Ward. “We’ve been able to coordinate our mix of work with our customers, pre-ordering materials when we know a certain group of cars is arriving, and adding resources and inventory where we can.”
AITX has managed to improve its turnaround times despite supply chain challenges.
American Industrial Transport Inc.
Anything new for next year?
Looking ahead to 2023, Northern Plains and AITX expect demand to remain resilient due to new investments in biofuels and other renewable fuels that will help strengthen the rail vehicle market. They also expect to move forward with capital projects that have been sidelined during the pandemic.
Additionally, Northern Plains plans to seek federal funding from the $1.2 trillion infrastructure bill signed last year, of which $66 billion will go to freight and passenger transportation (although the bulk of the funding will go to passenger transportation companies such as Amtrak).
Northern Plains operates in a number of areas where certain companies could benefit from federal funding, such as short lines, Mack says.
“We expect to participate in some way in some of these programs that are driving infrastructure growth and investment opportunities,” he says.
For AITX, demand for tank car qualification services will continue to grow beyond 2023, Ward believes, with demand likely to double over the next two to three years. That’s why the company is stepping up expansion projects in Indiana and Pennsylvania as part of what Ward calls a “methodical expansion process” and trying to better understand customer needs.
“We routinely speak to different customers and consider different options when they make sense for both the customer and us,” says Ward. “[We’re] always open to extensions.”
Email questions or comments to email@example.com.