Supply Chain

Coal Transport Declined in 2017, Continuing a Trend

03 August 2018

The 661 million short tons (MMst) of coal consumed in the U.S. electric power sector in 2017 was the lowest amount of coal consumed since 1983, and 2017 was the fourth consecutive year that U.S. coal consumption and coal shipments by all transport modes declined.

Coal train in Wyoming's Powder River Basin.Coal train in Wyoming's Powder River Basin.The Energy Department's Energy Information Administration (EIA) says that nearly 70 percent of the coal consumed in the power sector in 2017 was shipped either completely or in part by rail. The remainder was shipped by river barge, truck and other methods.

In late May, EIA said that fossil fuel consumption for electric power generation fell to 22.5 quadrillion British thermal units (quads) in 2017. That was the lowest level since 1994. The trend was driven by a drop in the use of coal and petroleum, and was offset somewhat by an increase in the use of natural gas.

Electric power sector coal consumption in 2017 was 36 percent (376 MMst) lower than in 2008, when U.S. coal production reached its highest level. The amount of coal shipped by rail has similarly declined, EIA says: 432 MMst of coal were shipped by rail in 2017, down from 2016 but 33 percent lower than the 647 MMst shipped by rail in 2008.

The share of coal shipments made by river barge has increased from 7 percent (2008) to 12 percent (2017). Coal produced in the Illinois Basin relies on shipments along the Ohio River and its tributaries for a significant share of its production. The share of shipments made by truck has gone from 12 percent (2008) to 9 percent (2017), coinciding with declines in Appalachian production that supplied generating facilities that were a relatively short distance from the mines.

Source: EIASource: EIAEIA says that the cost of transporting coal can vary greatly along different routes. In addition to costs associated with a particular mode of transport, factors such as route length, availability of transport mode, supply source options and the competition between coal and other commodities for transport can affect the transportation cost.

The real delivered cost of coal for all transport modes (commodity cost plus transportation cost) has fallen in recent years, most recently lower than $40 per ton in 2017. The real delivered cost of coal has fallen nearly $8.00 per ton (16 percent) since 2008, with most of the reduction attributable to declining commodity costs. Over that same period, overall coal transportation costs have fallen by 4 percent, as declines in truck (down 9 percent) and river barge (down 39 percent) costs more than offset a 3 percent increase in rail shipping costs.

To contact the author of this article, email david.wagman@ieeeglobalspec.com


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