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Outlook for the Eastern Coal-Hauling Railroads

Construction begins on the new Casky Inspection Yard in Kentucky for ILB coal trains. (Source: CSX)By Dave Gambrel

In August 2014, STB Chairman Daniel Elliott wrote to seven Class I and two short line railroads requesting an assessment of their ability to meet traditional “fall peak” service demands. This review of their responses focuses on the two railroads that comprise the majority of U.S. eastern coal mine originations, CSX and Norfolk Southern (NS). While Canadian National (CN) does originate coal at a few Illinois mines, its response did not deal with coal.

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Outlook for the Western Coal-hauling Railroads

Figure 1By Dave Gambrel

In August 2014, Surface Transportation Board (STB) Chairman Daniel Elliott wrote to seven Class I and two short line railroads requesting an assessment of their ability to meet traditional “fall peak” service demands. This review of their responses focuses on the two railroads that comprise the majority of U.S. western coal mine originations, Burlington Northern Santa Fe (BNSF) and Union Pacific (UP). BNSF was also asked to respond to additional issues that were raised at the September 4, 2014, field hearing held in Fargo, North Dakota. Products other than coal are mentioned only as they might add to an understanding of rail transportation challenges; crude oil and frac sand are two such commodities.

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Upper Midwest Coal Deliveries Up; Rail Issues Hit PRB Especially Hard

By Charlotte Cox and Darren Epps, SNL Energy 

Powder River Basin (PRB) coal deliveries in the upper Midwest declined during the first three months of the year compared to the previous two years despite frigid temperatures, illustrating railroad transportation difficulties and prompting questions about the impact on future coal pricing. SNL Energy analyzed coal deliveries to Iowa, Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin, six states impacted by rail issues stemming from a harsh winter and a boom in other businesses, including crude shipments.

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Ocean Freight Rates Remain Low

By Dave Gambrel

Coal producers seeking to export coal, particularly in Panamax and Handysize vessels, have seen almost six years of steady low ocean freight rates. Slight improvements have occasionally occurred in Capesize rates, almost always driven by sporadic jumps in Chinese iron ore demand. 

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On the Leeward Side of the Great Barrier Reef

Figure 1: Great Barrier Reef and Torres Strait Vessel Traffic Service (REEFVTS).By Dave Gambrel

The eastern coast of Australia is divided between two coal-producing states: Queensland and New South Wales. As shown in Figure 1, the entire eastern and northern coast of Queensland are faced by the Great Barrier Reef (GBR). The GBR runs out before it reaches the north end of New South Wales, but an Inner Route through the GBR provides an opportunity for a northbound vessel to travel the full length of Queensland under the protection (leeward side) of the GBR.

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