Tag Archive for coal traffic loss

Implications from report showing coal decline in US. Impact on rail freight?

Reports show that tougher coal burn environmental regulations could further weaken an already financially hurting US coal industry. It would also, if true, subtract a great deal of US profitable rail hauled coal business.

To read the entire Bloomberg article, go to http://bloom.bg/1HySiC5


Here area few of the important points made in the analysis.

1) Electricity generation from the domestic coal fuel could drop as much as 90 gigawatts a year.

2) Twice the decline analysts had previously predicted

4) ~ 292 gigawatts of coal-fired generation capacity available in 2014

5) Most of the coal-plant closures would occur by 2020

6) Sooner if natural gas remains highly price competitive

7) The Environmental Protection Agency’s proposal might cut carbon emissions from all U.S. power plants 25% below 2005 levels by 2020.

8) EIA analysis predicts that US coal production will decline 20%  by 2020 and 32% by 2035 versus a business-as-usual case.

9) Recent market price changes have already shown a customer change use pattern without the legislative push.

Coal fired power plants generated ,~ 37% of the country’s electricity in February 2015.  In contrast, coal had generated over 50% in 2007.

Bloomberg reports that the market capitalization of the publicly traded U.S. coal companies has dropped to about $19.4 billion this year. This market capitalization had been about $78 billion in 2011.


Both CSX and Norfolk Southern have already een a significant drop in their eastern rail coal traffic. In the past, some USA rail companies earned as much as 35% or more of their profits just from rail coal transport. Some strategic rail planners saw that as a market weakness. Some as early as 15 years ago.


To adjust for the coal traffic shifts, companies like Norfolk Southern have been trying to market more intermodal truck competitive cargo. Unit trains of coal are in some ways being replaced by high vertical clearance double stacked container trains. These rail companies are shifting traffic mix by reaping the benefits of engineering and train technology investment in plant heavy haul infrastructure since about 1984.

Investments in higher vertical rail freight route clearance projects and heavier axle allowed track/bridge structures are paying off in North America. This reflects a “grind it out” strategic change by managers over three decades.

This well executed railway market strategy in North American has not yet been adopted by most of the rest of the world’s rail managers. Too often, international rail freight managers and government planners have not adapted to such commercial competition forces. They have ignored much of the commercial engineering advanced by North American railroad leaders. #########################################


Are the US railroads adapting fast enough as coal volume drops?

Are these rail market shift patterns to be repeated on the railways from Mongolia to South Africa, and Brazil to India? Do these nations have a rail strategy to adapt to the market shifts?

Which are already showing a strategic shift and investment towards more efficient big train mixed non coal traffic? Which are still in denial?