Subscribe to our free, weekly email newsletter!


Railroad shipping: AAR chief makes case for coal

image
By Jeff Berman, Group News Editor
May 27, 2010

Even though coal carloads are down roughly 3 percent year-over-year, the commodity’s importance to the freight railroad industry is not to be overlooked. That was the message from Association of American Railroads (AAR) President and CEO Edward R. Hamberger in recent testimony for the Congressional Caucus on Coal.


In his testimony, Hamberger explained that railroads deliver 70 percent of all coal shipments to their final destinations, in turn moving enough coal to meet the electricity needs of every home in America. He added that twice as much coal today can be transported at nearly the same rates from 30 years ago.

Coal, said Hamberger, represents about 25 percent of total revenue for U.S. Class I railroads, with one in every five Class I jobs related to coal transport. And in 2009, coal accounted for 45 percent of tonnage and 25 percent of revenue for these railroads.

“Without coal, the U.S. rail network would face a need for vast restructuring with greatly reduced capacity to invest in the nation’s rail network infrastructure,” Hamberger said.

He added that policymakers should take steps to ensure the continued use of affordable domestic coal resources in the U.S. and called for support for the development of carbon-capture-storage (CCS) technologies and aligning carbon reduction timetables with its commercial availability.

Even though he stressed the need for new technologies, there are various legislative proposals that have the potential to curtail future coal usage, which could hamper the railroad industry’s ability to gain the returns needed to finance future infrastructure expansions and upgrades.

Some of these proposals pertain to carbon emissions from coal, which could result in “drastic cuts in coal use,” noted Hamberger. If such proposals eventually become law, railroads are calling for an “insurance policy” that would guard against negative effects to railroads due to legislative actions addressing climate change, he said.

These insurance policies could be in the form of contingent allowances for railroads whose revenues from coal decrease due to climate change legislation.

With coal loadings down year-over-year, following an annual decline from 2008 to 2009 due to a reduced demand for electricity, which led to high coal stockpiles, there is uncertainty as to what will happen next for rail coal movements.

“Coal remains a mystery long-term, but on an international basis it is a big part of the story,” a railroad source told LM. “Increasingly, the majority of the utilities’ use of coal here could be gone. I don’t see any massive new coal fire plants being built until they perfect some new technology. But I also don’t see a big reduction here. So that means all the infrastructure dedicated to coal will not be wasted.”

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

With no fuel tax increase likely ahead of this year’s mid-term elections, trucking interests in Washington are moving to Plan B in their attempt to shore up funding for badly needed infrastructure improvements.

Crowley Maritime Corporation has acquired majority ownership of Accord Ship Management (HK) Limited and Accord Marine Management Pvt. Ltd.

To catch a rising economic tide this year, the Port of Long Beach will need to modernize and find new efficiencies to move increasing amounts of cargo at a faster pace, said experts gathered earlier this month for the Port’s 10th annual “Peak Season Forecast” at the Long Beach Convention Center.

They are an annual rite of passage, general rate increases (GRIs) in the less-than-truckload (LTL) sector of the trucking industry. But is anyone paying attention? And more importantly, is anyone actually paying these announced GRIs, this year in the 3.9 to 5.4 percent range?

Article Topics

News · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA