North American Railcair Leasing Market to Reach $15.72B by 2021

According to technology research and advisory firm Technavio, the railcar leasing market in North America will grow to $15.72 billion by 2021, increasing by a CAGR of 9% during the forecast period.

The railcar leasing market is involved in the leasing of railcars to shippers and rail freight operators. Freight cars are the most preferred mode of transport in the railcar market in North America, generating more than 41% of the overall revenue. Freight cars are mainly used for the transportation of coal, forest products, metals, minerals and agricultural produce.

Technavio analysts highlight the following three factors that are contributing to the growth of the railcar leasing market in North America:

  • Increased demand for tank cars due to growing crude oil production
  • Rising production of coal
  • Railcars regulated by government bodies

“Tank cars are the most leased type of railcars in North America. The growth in crude oil production will result in the demand for rail freight transportation, which will drive the market for railcars in North America,” said Sharan Raj, a lead analyst at Technavio for logistics research.

The demand for tank cars is expected to further rise with the increasing number of shippers transporting flammable liquids and gases. Since these products need to be transported in a safe and secure manner, many rules and regulations are enforced on the vendors. In addition, all tank cars require braking standards that offer better safety and reduce chances of accidents.

Coal is one of the most important commodities for the railcar leasing market in North America. With the volume of coal (lignite, sub-bituminous and bituminous) estimated to reach close to 1.2 billion tons by 2021, there will be a further boost for market demand. In 2015, out of 11.2 million railcars leased to operators, 33% of railcars were dedicated to carrying coal. The coal production volume is expected to increase further, resulting in an increase in demand for railcars, which will drive the market for railcar leasing in North America.

“The growing awareness of green technologies and practices is leading to the implementation of environment-friendly technologies and efficient operating practices. The positive reception to the new technologies is pushing more vendors to adopt these technologies and practices,” Raj said.

Rail freight manufacturers are investing towards the development and implementation of new technologies in their fleets to make them more environment-friendly. This includes the construction of newer and more efficient railcars and installation of idling reduction technologies in locomotives, which adds a significant amount of revenue to the market.

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