I keep reading about how coal business is going away for the railroads and how they will be hard pressed to replace the traffic, etc. Deja-Vu! How did the railroads deal with this last time it happened-right after WWII when the coal business went away?
The coal business did decline after WW2 but it was still substantial for some roads. The decline was primarily in the use of coal for home and structure heating as it was replaced by oil and natural gas. The various anthracite roads took a major hit in their revenues and NYO&W was abandoned. Steam coal for power plant generation and metallurgical (coking) coal did continue in substantial volume.
After WWII, power companies were building oil, gas and nuclear plants, until the 1970s oil crisis and Three Mile Island nuclear disaster. Coal came back for a while.
Coal is on the decline, but it has not gone away yet. Although coal shipments by rail were down last week by 1.6 percent compared the same week last year, they are up 3/10ths of one percent for the year to date. Through June 16th, according to the AAR figures, America’s railroads moved 1,975,019 car loads of coal. This figure excludes U.S. operations of CPR, CN, and GMXT.
Texas has seen the recent shuttering to two large coal plants – Big Brown in Fairfield, TX and Monticello in Mt. Pleasant, TX. But coal is still a significant factor in generating electricity in Texas and will remain so through 2040. Last year coal was used to generate 28 percent of the electricity in Texas and 33 percent for the U.S.
It appears the railroads will have the time to scale their operations for a world without significant shipments of coal. And hopefully they will be able to find new traffic to take its place.
How is the three track UP/BNSF shared line (Wyoming?) doing if coal is going away?
There was talk within the last year about lifting a section of track out in the coal fields and reusing the track materials on the Blair (NE) Subdivision double tracking project. There’s about 10 or 12 miles of roadbed that’s sat dorment for a few years when they put the project on hold. I really don’t look for this to happen.
On another note, a while back my manager told me the railroad is hoping frac sand will take the place of coal. We are moving a lot right now, but with the politics involved in fracking, I’m not sure I’d want to bet the farm on it long term.
I guess either you go back to being a retailer vs wholesaler railroad or just downsize the assets and plant to reflect the declining traffic. I’d put my money on downsizing the assets and plant. The EHH plan.
Jeff
The answer to both questions, the then and the now, is that intermodal eventually made up for it on those railroads that could make money in that market. Also, the decline of coal after WWII was partially offset by tghe tremendous economies on some railroads of intelligent diesilization. Double stack came with the second coal decline. And imiports for the western railroads. And NAFTA traffic.
A positive sign to look for is when total US rail freight loads exceed the peak level of 2006. That year was still buttressed by rivers of coal loads coming from the Powder River Basin.
If railroads can get to the point where the are hauling more loads than 2006 even with the lower level of coal loads, they will have turned a corner.
Look for BNSF to lead the way in that regard.
Total number of loads don’t tell the whole story. They make more off a load of coal than a container. You may not be able to exchange one unit for another on a 1 to 1 basis. It may be 2 or 3 to 1 if you want to make the same amount of revenue.
That may be why they like to emphasize operating ratio. If you take in less dollars overall, you have to squeeze out more pennies out of those dollars.
Jeff
Is that really cost-effective?
Would it depend on how extensive the lift would be? Would they take just the rails, or rails and ties, or rails plus ties and tie plates, or rails and ties and tie plates and spikes and ballast, or…?
Would you have to factor in the fact that container trains would take less $ to run in the long run? Less weight, less horse power, less diesel fuel, less wear and tear?
Do coal trains and container trains move at roughly the same speed?
Not uphill they don’t…
Some coal cars are speed restricted to 50 mph (at least on CN). Apart from that speed would only depend on how much power the train has, which on loaded unit trains is normally the bare minimum required to climb their route’s ruling grade at around 15 mph.
One other thing to consider when calculating revenue is backhauls, intermodal has the potential to earn revenue in both directions, coal not so much.
Like what kind of backhaul?
My railroad viewing doesn’t include either coal trains or container traffic. To see a coal train, I would have to drive over to the BNSF line through Doon Iowa, but I hear the traffic over there is a little slow this week.
Exactly my point.
Coal, as with nearly all unit trains, is a revenue load in only one direction.
While there are “bare-table” moves of empty intermodal equipment they are few in number, and from what I have seen the majority of intermodal cars make most of their moves carrying a box.
Unit train rates are of course calculated to account for the empty return move, and this can make one-way intermodal rates appear smaller in comparison than they really are.
I think the real change that the Class I’s will have difficulty with is in marketing and operation, intermodal requires dealing with non-captive shippers and sometimes complex equipment moves, well, at least more complex than back-and-forth, back-and-forth unit trains.
This is a good point. A privately owned box moving empty counts as a “load”. I know marine boxes moving west empty go for a really low rate. RR owned boxes move as “empties”. I’m not sure what the billing looks like for those RR pool boxes - EMP, et. al. Anyone?
I would opine that this difficulty is reflected in the focus on OR.
The railroads have discovered that unit trains are fast and easy. With run-throughs they don’t even have to change locomotives, and the computer can handle the HP hours.
Before unit trains became a major factor, virtually all railroading involved marketing and the operations necessary to make those movements. Many commodities moved in carload lots (even coal), and there is a cost to providing that service - a cost that is minimal for a unit train.
I think it’s apparent that the railroads have generally worked to shed that carload business, in many cases willingly ceding it to trucks. The branch lines that served as the source for many of those carloads have either been abandoned, or given off to shortlines who turn those single cars into mini-unit trains from the standpoint of interchange.
I know, those cars will have to be sorted and routed at some point, but the Class 1 simply picks up or drops one group of cars at the interchange point - it no longer does the gathering and distribution, with the inherent costs.
One might wonder if the railroads would prefer t
[quote user=“tree68”]
I would opine that this difficulty is reflected in the focus on OR.
The railroads have discovered that unit trains are fast and easy. With run-throughs they don’t even have to change locomotives, and the computer can handle the HP hours.
Before unit trains became a major factor, virtually all railroading involved marketing and the operations necessary to make those movements. Many commodities moved in carload lots (even coal), and there is a cost to providing that service - a cost that is minimal for a unit train.
I think it’s apparent that the railroads have generally worked to shed that carload business, in many cases willingly ceding it to trucks. The branch lines that served as the source for many of those carloads have either been abandoned, or given off to shortlines who turn those single cars into mini-unit trains from the standpoint of interchange.
I know, those cars will have to be sorted and routed at some point, but the Class 1 simply picks up or drops one group of cars at the interchange point - it no longer does the gathering and distribution, with the inherent costs.
One might wonder if the railroads would prefer to shed all individual carload business (ie, manifest trains), going purely for the unit train moneymakers.<
Coal exports are still pretty common, at least here in the western US. Load up a coal train in Utah, Wyoming, or Colorado, then ship it to the west coast to be loaded onto a boat bound to Asia. As domestic coal use slows down, expect the remaining coal mines to cling onto export shipments.
However, the death of domestic coal will heavily hurt shortlines almost more than it will hurt Class 1 railroads. BNSF, NS, and UP will find new traffic in loads such as Intermodal, Oil, Frack Sand, Automobiles, etc. But what about the shortlines entirely focused on coal? My local regional railroad, Utah Railway; has basically been sitting on life support since they lost the last of their domestic coal contracts. Every quarter they keep operating without coal is another quarter in the red for them. Even if they got back their coal contract to run to Los Angeles Power’s IPP plant in Delta, Utah; it would only be a brief reprise before Los Angeles converts the plant to run on natural gas to follow California clean air laws (I know thats confusing, Utah based plant run by Los Angeles and following California law… but that is the truth of the matter). The isolated coal lines such as the Black Mesa & Lake Powell, Navajo Mine Railroad, and the Deseret Power are almost guranteed to die a sudden death if their respective power plants or coal mines shut down. Every shortline or regional railroad dependent on coal should be the focus of railfans right now, since their days are numbered.
Also not to get politics to involved in this… but I believe honestly presidential attempts to revive coal will only be a temporary stopgap. Every coal power plant operator knows that while one president for four or eight years might be pro-coal, its highly likely the next president after them will be strongly anti-coal. Even if the EPA continues to lift coal restrictions like they are now, it is likely local and state laws will be passed that will effectively put the stricter emissions rules back into place
The current rock-bottom price of natural gas (due to the fracking boom) has also been major factor in power company decisions.
On April 3, Wisconsin Electric (WeEnergies, WE) closed it’s 1.2GW coal-fired plant in Pleasant Prairie (Kenosha county) account “changing energy economics”. The timing of the shutdown was due to the amount of coal on hand and enroute.
https://www.wpr.org/pleasant-prairie-power-plant-ends-operation.
Wisconsin does a bit worse for the environment than Texas. According to WE, Wisconsin gets 48.1% of its energy from coal, 29.5 from natural gas, 13.6 from nuclear, 2.7% from oil, 2.6% from renewables, and 3.5% from ‘other’.
https://www.we-energies.com/home/we_keyfacts.htm
The Pleasant Praire closing is the 266th coal plant announced for retirement, according to WE https://www.wpr.org/we-energies-closing-coal-fired-plant-pleasant-prairie.
Because I live less than a mile from the Pleasant Prairie plant, I am selfishly glad to see it close, as it had been a source of much black dust, not to mention the mercury that was released. Of course, the residents near the Oak Creek plant (including the new Elm Road generating station), both of which will take the generating burden, are less than happy for the same reasons.
What I don’t understand, is why back in the late 2000’s, WE started a Billion-dollar expansion, building the Elm Road coal-powered generator. It went on-line in 2010, and now, less than eight year