What Railroads Haul: Coal
Although coal shipments have declined in recent years, coal is still an important part of the nation’s industrial Key Takeaways economy. Well over 90% of U.S. coal consumption is • Just five states account for nearly 70% of used for electricity generation while some coal is used to U.S. coal production, but coal is produce coke and for other industrial purposes. U.S. coal consumed all over the country — a feat is also exported to countries all over the world for made possible by freight railroads. steelmaking and power generation. In the past few years, U.S. coal exports have been equivalent to around • Rail coal volumes have fallen in recent 14% of U.S. coal production, more than double the years, but coal is still a crucial commodity for U.S. freight railroads and percentage of ten years ago. the larger economy. In 2020:
Coal markets have been changing. • U.S. railroads moved 3.0 million According to the Energy Information Administration (EIA), carloads of coal, with each rail car U.S. coal production in 2020 was 534 million tons, down carrying enough coal to power 19 homes for a year. 54% from the all-time high of 1.17 billion tons set in 2008 and the lowest annual total since 1965. • Coal accounted for 25% of originated tonnage for U.S railroads, more than U.S. coal consumption in 2020 was approximately 477 any other commodity. million tons, down 19% from 2019 and 58% lower than the 2007 peak of 1.13 billion tons. • Coal accounted for 14% of revenue for railroads, behind only intermodal, Because electricity generation accounts for so much of chemicals and farm products. U.S. coal consumption, the electricity market is key to coal’s fortunes. For decades, total U.S. electricity generation rose steadily, more in less in tandem with Originated Units by Class I RRs in 2020 Nonmet. minerals Food prod. Lumber & economic growth. 1,266,000 Metallic ores 1,528,000 wood 695,000 275,000 Coal Pulp & paper Over the past 15 years, though, total U.S. electricity 3,027,000 Farm 604,000 generation has been roughly flat while coal’s share has products 1,666,000 plunged. In the 1990s, coal’s share averaged 52%. By Chemicals Petr. & coal pr. 2,137,000 693,000 2005 it had fallen to 50%. In 2020, it was down to 19%. Stone, clay, Other glass pr. 623,000 Meanwhile, the natural gas share rose from 16% in 2000 445,000 to 24% in 2010 to 40% in 2020. For renewables other than Prim. metal pr. Total = hydroelectric (mainly wind and solar), the share rose Intermodal* 433,000 26.2 million 11,078,000 Transp. equip. from 2% in 2000 to 13% in 2020. 1,209,000 *Some intermodal is included Waste & scrap in other commodities. 556,000 Source: AAR (FCS) Concerns about the environmental impact of coal has played a major role in its decline, but market forces have been even more important. Rapid increases in natural gas production brought about by technological advances in natural gas extraction especially hydraulic fracturing, or fracking, has meant that natural gas is much more plentiful and cheaper for electricity producers than it used to be.
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Through technological advances, responsive U.S. Coal Consumption and Production service, competitive rates and massive private (millions of tons) 1,200 investments, railroads continue to provide Production safe, reliable high-value transportation service 1,050 to their coal customers. 900 750
U.S. coal production is focused in a relatively small 600
number of states, but large amounts of coal are 450 consumed all over the country. Consumption 300
According to EIA data, 67% of U.S. coal shipments in 150 2020 were delivered to their final destinations by rail, 0 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 followed by water (13%, mainly barges on inland Source: Energy Information Administration waterways); truck (10%); and conveyor belts (10%, mainly at minemouth plants). Originated Carloads of Coal by U.S. Class I Railroads (millions) As coal’s share of U.S. electricity generation has 8 fallen, so too have rail coal volumes. In 2008, U.S. 7 Class I railroads originated a record 7.71 million carloads of coal. In 2020, coal carloads were down to 6 3.0 million, 61% lower than 2008’s peak. 5 4 In 2020, coal accounted for 25% of originated 3 tonnage for U.S. Class I railroads, far more than any 2
other commodity, but coal tonnage in 2020 was 1 down 60% from 2008’s peak. Coal accounted for 14% 0 of Class I rail revenue in 2020; only intermodal, '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
chemicals and farm products accounted for more. Source: AAR Freight Commodity Statistics
Nearly all coal transported by rail moves in highly productive unit trains, which often operate around the clock, use dedicated equipment, and generally follow direct shipping routes. Revenue per ton-mile (RPTM) is a surrogate for rail rates. In 2019, average RPTM for coal was 2.15 cents. The average for all commodities other than coal was 5.12 cents.
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