Happy Valentine's Day - Coal is up

The Association of American Railroads, an industry group, reports that coal carloads on American railroads are up 26 percent over last year for the first five weeks of 2017. Nobody thinks this means that coal is making a comeback. Most analysts believe that coal will never return to the levels once enjoyed by the railroads, the levels that kept the eastern roads solvent and prompted Union Pacific and BNSF to keep upgrading their joint lines into the Powder River Basin coalfields.

This is far from the victory for environmentalists that many would try to claim. Yes, the EPA has been staring down coal users for the past eight years or longer. But while coal users were staring right back without blinking, they were also discovering that natural gas had become the way to go. Even without the oil boom-now-bust, America still now has enough natural gas to feed power plants through the end of the current century and well into the next one, and this has made natural gas cheaper.

It has been a struggle, to be sure, to find the money to fit coal plants to burn gas or to build new ones. The EPA does not like coal, or oil, or gas, for that matter. The favor it did was to make it clear that coal was the first target; they made the decision to go with gas easy, because clean coal tech was going to be way more expensive, or taxed highly even if it wasn’t. The new administration’s EPA may yet change that, but nobody is betting on it.

Meanwhile, only a very few of the carloads accounting for the AAR reported 4 percent gain in carload traffic for those same five weeks were parts for solar or wind power plants.

Which brings to mind the all-around general axiom that American railroads are the country’s only universal carrier of freight. Railroads have historically proven this again and again. From the biggest oversize load to the smallest product, railroads can carry it. Of course, if you don’t have enough of it, the small stuff may be something that you wouldn’t want to pay a railroad to carry.

But if coal doesn’t come back, railroads are going to need something to replace it. Why not a new emphasis on express packages, with an eye towards resurrecting something like the old Railway Express Agency?

Class I railroad management will tell you this is a non-starter. For one thing, they’d be competing against established air and ground freight companies like UPS and FedEx. For another thing, a network of delivery services (from railhead to door) would have to be established. The old model where you took the package down to the train station, or picked it up there, wouldn’t work; because nobody knows where the train station is, or if it is. At least that's what the Class I managers would say.

Here are a couple of ideas to counter this. First, the established package companies are getting long in the tooth. They have fallen into a mold where they rely on Internet retailers to give them enough volume. They have too many tiers of charges for as many or more tiers of service, none of which get me my package when I want to get it and with minimal risk of theft or damage. Maybe a railroad office of some kind that is secure and open 24 hours a day would be an attractive alternative.

Everything, however, is predicated on the railroads’ ability to deliver on the advertised time and for a reasonable price. This applies to all any new business that must supplant king coal. Railroads have problems with both concepts, however. Keeping to schedules is no longer the forte of American Railroads.

There is so much wiggle room (call it padding) built into most schedules, both freight and passenger, that the concept of on time performance would have to be completely redefined. Keeping prices down hasn’t been in the railroads’ playbook, either. Under deregulation, the railroads have become accustomed to charging what the traffic will bear, and to making up for any loss in revenue with price increases. Knowing full well that there are certain commodities that virtually must move by rail allows for this kind of arrogance. (But resulting in recent shipper lobbying to have the STB establish rules for reciprocal switching, if not outright open access.)

But times are changing. Traffic patterns will shift, and shippers will find alternatives if given half a chance. So will the general public, and so will the Internet retailers. Is anyone listening?

©2017 – C. A. Turek – mistertrains@gmail.com

(Charles A. Turek is a writer and novelist based in Albuquerque, NM. After four decades working in areas of the insurance industry related to transportation, he now writes on all aspects of American railroading. Charles is a political conservative but believes in public funding of passenger rail as a part of the federal government’s constitutionally conservative obligation to provide for defense and public infrastructure so that private enterprise may flourish.)