The McCloud River Railroad did not initially get into the per diem boxcar business. The McCloud of the mid-1970’s was still a major hauler of boxcar traffic with a large shop building. Both of these factors attracted the interest of Itel Rail, one of the leasing companies taking advantage of the per diem boxcar craze. The end result was that Itel successfully purchased the McCloud River in the first part of 1977. One of Itel’s first acts was to supply the McCloud River with 400 of it’s own boxcars, numbered 2000-2399. The boxcars were built by FMC in Portland, OR during August of 1977. Some went to McCloud first to be loaded and shipped out, but most went directly into revenue service around the rail industry.

The boxcar boom eventually went bust, as the incentive per diem concept was found to be illegal and abolished. With lower per diem rates and a generally lackluster economy, many of the new boxcars added to the nation’s rail fleet during the mid- to late 1970’s were no longer needed. The end result was that many basically brand new boxcars were returned to their home roads for storage. Itel leased boxcars to several western shortlines, and as the 1980’s dawned many of these other roads started turning the boxcars back to Itel. Itel sent most of these cars to the McCloud River to be stored until better times prevailed. Boxcars formerly leased to the Anhapee & Western, Sierra, Camino Placerville & Lake Tahoe, Seattle & North Coast, Arcata & Mad River, and several other railroads made their way to McCloud to be stored. Many of these boxcars were entered into the McCloud roster and given McCloud reporting marks and numbers. These boxcars were sent back out when they could be, but a lot of them ended up spending most of their time in storage on McCloud sidings and spurs.

The McCloud rostered close to 2,000 boxcars at the dawn of the 1990’s. However, in early 1992, the boxcars (along with all other railcars owned by Itel) were sold to GE Capital. GE Capital continued a contract with the new McCloud Railway to store and repair the boxcars as necessary, and through the mid-1990’s the railroad patched up and shipped out a lot of the boxcars, relettering them for the Texas, Oklahoma & Eastern railroad in the process.

By the late 1990's a few more than 100 boxcars remained on McCloud trackage, stored either in McCloud, on the Pondosa branch remnant, or at Hambone. In the early part of 2006 GE Capital finally started removing these boxcars. The McCloud Railway is moving these cars out to the Union Pacific, who takes them north. The final destination for these cars is Mandak Scrap Metals in Manitoba, Canada, where they are being cut up at the rate of several each day. The steel then goes to the nearby Gerdau Ameristeel rolling mill for recycling.