Does anybody here know about entering into the leasing business? I know its capital intensive but Im curious as to what steps need to be taken, what type of cash flow is there, etc. For the hypathetical situation, let’s just lease 30k ncni tank cars for ethanol transport. How long is delivery going to take due to backlogs? Whats the cost/return? Thank you.
Tom
Tom’s request rings with me. Not because I’m a venture capitalist (I’m not), but because the whole TTX-type field is so rife with little specialty companies. I do know that a lot of them are based in Chicago and IIRC some of them are owned outright by individuals – or if not that, maintained as private corps. The question remains, at least in my mind, as to whether people get rich in the rail equipment-leasing field, or whether it takes rich people to enter that field as owners.
Perhaps you more aware types could clue us in on the major players in the field?
PS: PS to Tom: Any equipment company that leases its stuff out and is publicly owned (freely trades shares): send for their 2006 Annual Report (if company follows Calendar Year as its Fiscal Year, the 2007 reports won’t be out 'til about March). - al
You are perfectly within your rights to identify yourself as an “individual investor.” That’s your goal, isn’t it?
Railcar leasing isn’t for little guys, the big dog in the field is GERSCO (GE Railcar Services Co.) a subsidiary of GE Capital, with a fleet numbering well into six figures in North America, and into 5 figures in Europe. Others are Union Tankcar Line (UTLX), Trinity Railcar Leasing (TILX), Helm Financial, CIT Group (CITX), First Union Financial (FURX), and others. Many of these are subsidiaries of big Banks or Insurance Companies. One small company that recently disappeared was Southern Illinois Railcar Leasing, if I recall correctly they got into financial trouble and were fortunate that Suomitomo Financial (big Japanese Bank) was looking to get into the US railroad equipment market, they were able to sell out rather than go bankrupt.
GE doesn’t talk much about GERSCO (perhaps they don’t want to “hex” an experience similar to SEACO, from which they dropped out due to poor performance[:P]). But are you or is anyone else able to give an idea of the type of codes their more common types of freight cars would use? Or which, if any, cooperating railways showing their ID upfront?
Somewhere I’m hoping on the web is a master list of most if not all lease players. It would indeed be an overwhelming list; this stuff reminds me a little of the short-term money markets, which barely existed in the Sixties, bloomed in the Seventies and ever since. Amazing how complicated things get.
A similar query: do the RR co’s wish they had more rolling stock in their direct ownership? Who pays for maintenance.? I realize that the cars are already under the RRs’ control as much as possible.
Tomnoy your example is right on the point. Cars for ethanol transport are in extremely short supply, and there is a multi-year wait for new ones. One new ethanol plant has suspeded construction, citing tank car availability and the price of corn; and at least two more plants have elected not to begin building.
I wish I had a fleet of cars either on short term rental or just coming off a longer term lease!
Al, annual reports really only provide a summary. Its a difference between financial and managerial accounting. I would like the later but companies only provide the former to outsiders. Theres plenty of sites out there that list reporting marks and owners which you could use to figure out the larger leasors.
There is very little backlog for ethanol cars at this time. In fact orders have been cancelled for delivery of such cars.
ed