FreightCar America Eyes Railcar Rebound After Major Market Share Gains

FreightCar America is positioning itself to expand its presence in railcar manufacturing and aftermarket components as management sees railcar demand recovering from a cyclical trough, CEO Nick Randall told investors during a company presentation.

Randall said the company, which has operated for 125 years and began as a coal-car manufacturer within U.S. Steel, now focuses exclusively on manufacturing rather than railcar leasing. FreightCar America shifted railcar production from the United States to Mexico in 2018 and began manufacturing at its Castaños facility in 2019. More recently, it has expanded into the aftermarket business through acquisitions, including Carly Railcar Components and Southern Parts & Equipment.

Management estimated that the North American railcar market will see roughly 25,000 to 26,000 units ordered in 2026, below the industry’s longer-term annual average of approximately 40,000 units. Randall said the company expects order volumes to improve in 2027 and 2028, with 2028 potentially returning to the 40,000-unit level.

Despite the softer market, FreightCar America has gained share. Randall said the company accounted for 47% of all railcar orders placed during the second quarter, based on FTR Transportation Intelligence data. Excluding tank cars, a category FreightCar America does not currently manufacture, the figure would have been 55%.

He cautioned that quarterly order intake can be uneven and said the company does not expect to sustain a 47% share. FreightCar America represented about 30% of orders during the first half of the year, compared with roughly 14% for the prior full year and approximately 4% to 5% about five years ago, according to Randall.

“We probably won’t sustain 47%, and we wouldn’t have the capacity, nor we want to sustain 47%,” Randall said. He said a more sustainable target could be around 18% market share in a 40,000-unit annual market, based on the company’s potential capacity of roughly 7,000 railcars.

The company’s current portfolio covers about 70% of the railcar market, Randall said. FreightCar America identified open-top hoppers as its leading market position, while it estimates it has roughly one-third of the gondola market. The company has also been expanding in covered hoppers and flatcars.

Randall said the company competes by tailoring railcars to customer requirements rather than seeking to be the lowest-cost supplier. Its customers include railcar leasing companies, Class 1 railroads and private shippers or industrial operators. For example, the company can use different materials and alloys to improve corrosion resistance for railcars transporting certain commodities.

The company’s Castaños campus has four operating manufacturing lines, each generally capable of producing about 1,500 railcars annually, for total operating capacity of about 6,000 units. A fifth line is under roof and could be activated in less than 90 days if customer demand supports it, Randall said. Management believes it could produce 7,000 to 8,000 units annually without significant investment.

FreightCar America has also improved its ability to manufacture multiple product types on the same line during the same shift. Randall said shared engineering, parts and bill-of-materials processes between products such as covered hoppers and open-top hoppers allow the company to reduce supply-chain complexity and react more quickly to changing demand. Some lead times can be as short as six weeks from order placemen...