Coal Is Gone, It's Not Coming Back

LOS ANGELES—Don't get your hopes up about the return of coal. “The fact is that it is gone and it is not coming back,” said Anthony Hatch, principal at ABH Consulting, said in a presentation on railway systems and the intermodal network at the annual Pulse of the Ports conference. The fact is that we are reliant on an intermodal rail system and, even with coal prices rising, that system isn't likely to change.

One of the main reasons that Hatch believes that coal isn't back is because the new Administration is simultaneously promoting coal and natural gas. “It is very difficult to be on both sides of the same war,” he said. Since 2007, US rail carloads of coal have steadily declined with slightly more than 4 million carloads in 2016, compared to more than 7 million in 2007.

“Coal was a big generator for the rail industry, and for years it was the staple. You didn't have to think about it; you just mined it,” said Hatch. “Today intermodal has been the railroad growth story since the late 80s, and in the certainly in the rail renaissance, as I call the 21^st century. This is the critical focal point, and we spend a lot of time thinking about it.”

The Los Angeles to Chicago route is the strongest intermodal corridor. “There is nothing stronger than the corridor that leads out of this bay. This is a critical area.” It has sufficient capacity for trains to continue to move, is long enough to compete with trucks, has competitive unit costs and has a strong highway feeder system at terminals.

Intermodal traffic staggered at the end of 2016. This may have occurred as the result of an unexpected 180 basis point drop in expected GDP last year because of housing. However, it has returned this year. “Volumes, I think, have reflected that intermodal is growing.  This year, we have seen a return to growth,” said Hatch.

The slowdown did cause some concern in the industry. “People are concerned about the industry because of the coal story and the freight recession last year,” said Hatch. “Coal has stopped declining, and I don't believe that it is going to come back, but it is up 20%. Call that Trump luck.”

LOS ANGELES—Don't get your hopes up about the return of coal. “The fact is that it is gone and it is not coming back,” said Anthony Hatch, principal at ABH Consulting, said in a presentation on railway systems and the intermodal network at the annual Pulse of the Ports conference. The fact is that we are reliant on an intermodal rail system and, even with coal prices rising, that system isn't likely to change.

One of the main reasons that Hatch believes that coal isn't back is because the new Administration is simultaneously promoting coal and natural gas. “It is very difficult to be on both sides of the same war,” he said. Since 2007, US rail carloads of coal have steadily declined with slightly more than 4 million carloads in 2016, compared to more than 7 million in 2007.

“Coal was a big generator for the rail industry, and for years it was the staple. You didn't have to think about it; you just mined it,” said Hatch. “Today intermodal has been the railroad growth story since the late 80s, and in the certainly in the rail renaissance, as I call the 21^st century. This is the critical focal point, and we spend a lot of time thinking about it.”

The Los Angeles to Chicago route is the strongest intermodal corridor. “There is nothing stronger than the corridor that leads out of this bay. This is a critical area.” It has sufficient capacity for trains to continue to move, is long enough to compete with trucks, has competitive unit costs and has a strong highway feeder system at terminals.

Intermodal traffic staggered at the end of 2016. This may have occurred as the result of an unexpected 180 basis point drop in expected GDP last year because of housing. However, it has returned this year. “Volumes, I think, have reflected that intermodal is growing.  This year, we have seen a return to growth,” said Hatch.

The slowdown did cause some concern in the industry. “People are concerned about the industry because of the coal story and the freight recession last year,” said Hatch. “Coal has stopped declining, and I don't believe that it is going to come back, but it is up 20%. Call that Trump luck.”