Eastern US railroad CSX is the only major carrier to have increased coal shipments this year, with low natural gas prices driving down shipments at other railroads.
The year-on-year increase in CSX’s coal volume has been relatively small, but it stands in sharp contrast with its competitors. CSX coal volume rose by 0.9pc during the first 31 weeks of 2019 through 3 August, CSX data indicate. The 483,952 carloads of coal hauled include both domestic utility and export shipments.
Nationwide across all railroads, coal volume is down by 6.2pc to 2.4mn carloads.
“Despite a summer heat wave of historical proportions, very low prices for natural gas have seriously weakened the seasonal demand for coal-generated electrical power,” Association of American Railroads (AAR) senior vice president of policy and economics John Gray said.
Coal volume at eastern competitor Norfolk Southern (NS) is down by 5.1pc. Shipments at western railroads BNSF and Union Pacific are down by 5.5pc and 11pc, respectively.
Railroads are facing similar challenges with other commodities.
US rail traffic this year is down across every major commodity category except petroleum and petroleum products. Overall carload traffic is down by 3.2pc compared with last year, while intermodal shipments are off by 3.7pc, AAR data show. The petroleum and related products segment is up this year by 21.2pc to 395,691 carloads, AAR said.
The US and China trade dispute is cutting into railroad traffic, particularly the grain and intermodal segments. About half of railroads’ rail intermodal business is international, including imports of consumer and intermediate manufacturing components and exports such as food products.
“Trade policy uncertainty continues to drag down this traffic segment. Export grain movements are also facing increasingly serious headwinds from threats to trade policy stability,” Gray said. US grain traffic is down by 4.8pc this year.
The US Treasury Department on 5 August designated China a “currency manipulator,” accusing Beijing of changing the yuan exchange rate for competitive purposes. Beijing in turn vowed to scale back agricultural imports from the US.
That escalation followed US president Donald Trump’s recent threat to impose additional tariffs on US imports from China after 1 September. Trump and his trade and economic advisers said the threat would force Beijing to negotiate a deal on US terms that would resolve the ongoing trade war.
Chemical shipments are mostly flat, falling only 0.3pc compared with 2019.
The same low natural gas prices affecting coal “appear to have allowed chemical production to pretty much hold steady even in the face of the uncertainty around foreign trade which has been the source of much of the recent growth in chemical production,” Gray said.
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- On August 8, 2019