November 9, 2012
North American
Railcar Outlook
A presentation to ACACSO by
GATX
Unless otherwise noted, GATX is the source for data provided
NYSE: GMT
Forward-Looking Statements
This document contains statements that may constitute forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor
provisions of those sections and the Private Securities Litigation Reform Act of 1995. Some of these statements may be
identified by words like “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “predict,” “project” or other similar
words. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, including those described in GATX’s Annual Report on Form 10-K for the year ended
December 31, 2011 and other filings with the SEC, and that actual results or developments may differ materially from
those in the forward-looking statements.
Specific factors that might cause actual results to differ from expectations include, but are not limited to, (1) general
economic, market, regulatory and political conditions affecting the rail, marine and other industries served by GATX and
its customers; (2) competitive factors in GATX’s primary markets, including lease pricing and asset availability; (3) lease
rates, utilization levels and operating costs in GATX’s primary operating segments; (4) conditions in the capital markets
or changes in GATX’s credit ratings and financing costs; (5) risks related to compliance with, or changes to, laws, rules
and regulations applicable to GATX and its rail, marine and other assets; (6) costs associated with maintenance
initiatives; (7) operational and financial risks associated with long-term railcar purchase commitments; (8) changes in
loss provision levels within GATX’s portfolio; (9) conditions affecting certain assets, customers or regions where GATX
has a large investment; (10) impaired asset charges that may result from changing market conditions or portfolio
management decisions implemented by GATX; (11) opportunities for remarketing income; (12) labor relations with
unions representing GATX employees; and (13) the outcome of pending or threatened litigation.
Given these risks and uncertainties, readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management’s analysis, judgment, belief or expectation only as of the date hereof. GATX has
based these forward-looking statements on information currently available and disclaims any intention or obligation to
update or revise these forward-looking statements to reflect subsequent events or circumstances.
2
GATX Corporation
• Founded in 1898
• Listed on NYSE in 1916
• Paid quarterly dividends since 1919 without
interruption
• One of the largest rail rolling stock lessors in the
world
3
Today’s Discussion
Objective
• Provide useful, actionable information about the North
American fleet to railcar users and other stakeholders
Agenda
• Fleet composition (since Jan-’08)
• Ownership trends (since Jan-’08)
• Current market conditions
4
North American Fleet Composition by
Owner Type
5
Source: UMLER as of 1/1/12
Change in Fleet Composition
1/1/08-1/1/12
Car Type
Change
(000)
Change
(%)
Tank
Intermodal
Non-Intermodal Flat
Open-Top Hopper and Gondola
+4
-1
-9
-22
+1%
-1%
-6%
-5%
Covered Hopper
Box
-24
-51
-5%
-26%
6
Source: UMLER as of 1/1/12
Bulk Railcar Gross Rail Load
1/1/08-1/1/12
Railcar Type
Covered
Hopper
Open-Top
Hopper and
Gondola
Tank
Average
GRL 1/1/08
273.6
Average
GRL 1/1/12
276.1
Change
275.4
277.0
+0.6%
264.9
265.7
+0.3%
+0.9%
7
Source: UMLER as of 1/1/12
Ownership & Trend 1/1/08-1/1/12
TTX, 9%
Fleet Makeup at 1/1/12
Shipper, 19%
Lessor, 48%
Railroad, 24%
Owner Type
Change (000)
Change (%)
Lessor
TTX
+25
-5
+3%
-4%
Shipper
Railroad
-38
-85
-11%
-18%
8
Source: UMLER as of 1/1/12
Carloads (MM)
Fleet Size (000s)
Total Carloads vs. Fleet Size
1/1/08-1/1/12
9
Source: UMLER and RSI
Total Rail Industry
Railcar Manufacturing Backlog
10
Source: ARCI
Total Builds vs. Attrition
11
Source: UMLER, ARCI
What Are The Headlines Driving Fleet
Performance?
• Good
o Fracking
• Bakken crude
• NGLs
• Plastics and chemicals recovery
o Auto recovery
• Bad
o Drought
o Coal car oversupply
• Mixed
o Railroad velocity
12
Tank Car Fleet Size vs.
Chemical and Petroleum Carloads
13
Source: UMLER and AAR
A Strong Tank Car Market
• Tank car backlogs at all builders extend into 2014
• ARCI tank car backlog at ~42,370
• FTR forecasts record or near-record production
through 2014
• Crude as driver
•
YTD Petroleum Product carloadings are up >35% vs. similar
point in 2011
14
New Car Production vs. Attrition
25,000
20,000
15,000
10,000
5,000
New Large Pressure
Tankcars
New Large General
Service Tankcars
All Other New
Tankcars
Tankcar Attrition
2008 2009 2010 2011 2012F2013F
Over 6 years:
• Large GS tanks will be 48% of build vs. 18-25% of fleet
• Large pressure cars will be 14% of build vs. 13% of fleet
• Remaining fleet will shrink by 2% due to “crowding out” by shalerelated cars
Sources: UMLER, ARCI, FTR, GATX business partners
15
North American Tank Car Fleet Size
Sources: UMLER, ARCI, FTR, GATX business partners
16
Coal Cars Facing Multiple Near-Term
Headwinds
• YTD coal carloadings are down 8.6% vs. similar point in
2011, and down 17.3% compared to this point in 2008
• Railroad velocity up ~2MPH YOY
• NA coal production down ~10% versus recent peak
• Aggressive environmental regulation compelling plant
closures due to retrofit costs
• Natural gas trading at or near historic lows
• Recent moderate weather patterns have reduced burn
and increased stockpiles
Sources: Argus, EIA
17
Medium-Cube Open-Top Fleet Size vs.
Coal Carloads
18
Source: UMLER and AAR
Distribution of Coal Fleet
Fleet Size
22,000
67,751
90,673
96,376
Railroad
Shipper
Lessor Active
Lessor Idle
• Lessors as Marginal Capacity
• Sources of Utilization Improvement
• Attrition
• Velocity
• Weather
• Gas Prices
Source for idle car estimate: GATX customers and business partners
19
Conclusions for Tank Cars
• Tank car supply should remain tight for the near term, so
users should value and prioritize it over other concerns
• Ethanol is the market to watch
• Regulatory developments must be monitored
• Recent spike in ownership will abate, as complexity
around regulations and maintenance, plus variable
demand, will push users back to leasing
20
Conclusions for Freight Cars
• Outside of a few markets (e.g. automotive), freight cars are
either in balance or oversupplied
• Broad, near-term carload growth is unlikely, though
retirements will keep most freight car markets balanced
• For now, freight car users can manage costs with less
concern for availability, but improved economic conditions
and/or normal weather patterns could shift the balance back
to lessors
o Grain – impact of robust harvest?
o Coal – impact of cold winter and/or rising gas prices?
• Railroad velocity could tip the supply/demand balance
21
Recap
Provide useful, actionable information
about the North American fleet to
railcar users and other stakeholders
• Fleet composition (since Jan-’08)
• Ownership trends (since Jan-’08)
• Current market conditions
Questions?
Robert J. Gordon
Director, Fleet Administration
GATX Corporation
(312) 621-6375
robert.gordon@gatx.com