Type Size A A A

Chairman’s Letter

The COVID-19 pandemic had negative effects across our global businesses in 2020. In Rail North America, railcar industry loadings quickly fell to levels beneath the bottom seen in the Great Recession, putting significant pressure on what were already low lease rates. The pandemic also had a temporary chilling effect on the secondary market, and it created inefficiencies in our maintenance network due to frequent facility closings in an effort to keep our employees safe. In Rail International, COVID-19 resulted in delayed investment in new railcars due to shutdowns and interruptions at the railcar manufacturers, as well as customers postponing fleet decisions. The pandemic had its most profound effect on our aircraft spare engine leasing partnership with Rolls-Royce due to the dramatic decline in airline traffic around the world.

Given the extremely challenging environment, GATX's employees executed our time-tested, cyclical-aware strategy extraordinarily well. We maintained our global railcar fleet utilization between 98% and 100%. We proactively handled the inevitable wave of requests for financial relief from impacted customers across our businesses. We capitalized on the weak market conditions to identify attractive investment opportunities, investing over $1 billion worldwide. Above all, we kept our employees safe and healthy-whether they were working remotely or on-site in our maintenance network. Although 2020 posed unparalleled obstacles, the performance of our employees laid a strong foundation for our continued success.   

Perhaps the most impressive aspect of our 2020 performance was our high railcar fleet utilization. How do we keep our fleet utilization so high when our competitors' fleet utilization is significantly lower? While our superior asset allocation and long customer relationships certainly play a role, in this letter I want to highlight our customer service-and why it has been key to our success for over 120 years.

Rail North America operates in the most developed and competitive railcar leasing market in the world. In order to compete effectively, customer service is critical, as evidenced by the fact that over 80% of our leases are "full-service" leases. These services come in many forms. For instance, we perform the majority of our railcar fleet repairs in our owned maintenance network, where we believe the safety, quality, and delivery times are superior to the competition. Our engineering team helps our customers with railcar designs and specifications, railcar modification projects, technical support, regulatory compliance, and preventative maintenance and inspection programs. Multiple internal teams work together to find the right railcar for our customers' needs and deliver it on time with zero defects. We provide a variety of training, including through our unique TankTrainer™ mobile classroom, which we have used to train over 18,000 customers and first responders since 1993. Through our investments in technology, customers can access real-time maintenance and fleet management data for their railcars on our customer portal, MyGATXRail.com. Lastly, employees lead and participate in various industry regulatory committees that work to improve the safety and reliability of freight rail transportation. All of these services are coordinated by our Account Solutions team, whose sole objective is making it easier for our customers to operate their railcar fleets.  

Within Rail International, competing successfully in Europe requires a similar focus on service, in part due to an even more complex regulatory environment when operating across many different countries. GATX Rail Europe offers many of the same services as we do in North America, with the added advantage of being able to assemble our own new railcars at our Ostróda, Poland workshop, thus ensuring the highest levels of quality and reliability. In India's emerging railcar leasing market, Indian Railways controls all private railcar maintenance, so GATX Rail India brings other forms of expertise to its customers. In particular, our team has used GATX's 120+ years of railcar knowledge to assist the Indian regulators and our customers in improving railcar designs and manufacturing quality in the market. Additionally, we helped formulate the original leasing industry policies that gave birth to this fast growing market.

The newest addition to GATX is Trifleet, the world's fourth largest tank container lessor. One of our primary attractions to Trifleet was the service-intensive nature of the business. For instance, through Trifleet's "Excellence Guarantee," our customers are assured of worry-free tank container delivery, including proper technical specifications and repair criteria. Trifleet bears the responsibility for periodic tank container regulatory inspections, and we provide customers with online, real-time access to important safety and test data on their tank containers. Trifleet's commitment to excellence in customer service aligns well with the philosophy that has been in place at GATX since it was founded in 1898.

Although the customer leases at RRPF, GATX's aircraft spare engine leasing joint venture with Rolls-Royce, are net leases, there is a crucial service component in this business as well. The majority of the leases at RRPF involve spare engines that are covered under Rolls-Royce's TotalCare® option, which removes the burden of engine maintenance from the airline customer and transfers the management of the associated operating risks to Rolls-Royce. Our 23-year partnership with a premier service provider such as Rolls-Royce has been instrumental to the success of this business.

The customer service examples described here are important at every point in the business cycle, but they are especially critical in a weak market, when overcapacity exists and customers can choose available equipment from any number of lessors. Because of our superior service capabilities, it is at this moment when GATX is consistently able to outperform competitors and win a bigger share of our customers' business. We are then well-positioned to grow with our customers and excel financially as the market improves.  

Everyone across GATX rose to the challenge in 2020. I want to thank GATX employees for their grit, determination, and commitment to customer service throughout this pandemic. Armed with their considerable skills, a strong balance sheet, and a time-tested investment strategy, I see a bright future ahead for GATX.


Brian A. Kenney
Chairman, President and Chief Executive Officer
GATX Corporation