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By 2030, American railroads will lose about $5 billion
in revenue as demand for U.
S.
utility coal falls to about half of 2020 levels, according to a Moody's report released Wednesday.
The BNSF Rail and Union Pacific regions saw the largest declines in thermal coal demand due to the Powder River Basin concession, while the Canadian state and the southern Kansas City region had the least
demand for thermal coal.
Moody's estimates that coal's share of U.
S.
power generation will fall from about 20 percent in 2020 to about 10 percent
by 2030, as the U.
S.
transitions to cheaper natural gas and increased renewable energy generation.
Coal accounted for 23.
9 percent of U.
S.
electricity generation as of June, compared with 27.
4 percent
for all of 2018, according to the Energy Information Administration.
Historically, coal has been the largest commodity for rail transportation groups, accounting for 13 percent
of last year's production, according to the Association of American Railroads.
According to 2018 data, among the seven first-class railroads in the United States and Canada, the highest percentage of coal as a percentage of revenue are CSX and BNSF, at 18.
3% and 16.
8%,
respectively.
Norfolk Southern had 15.
9 percent, while Union Pacific had 12.
5 percent
.
Railways will increasingly rely on exporting coal, which could be a volatile source of demand, the report notes, although railroads have expressed willingness to moderate such volatility
with lower freight rates.
Canadian Railways Canadian Pacific and Canadian National, which also operate in the Illinois Basin, reportedly export the largest volumes, with tonnage equivalent to 87 percent and 80 percent
of their annual coal revenues, respectively.
U.
S.
export volumes are largely geographically limited because there are few export channels in the western U.
S.
, mainly served
by UP and BNSF.
The growth in demand for multimodal transport will mitigate revenue losses while also improving service levels
.
In the long run, however, railways run the risk of underutilizing the
network.
As coal demand declines, railroads must assess whether parts of the coal network can be used to transport other cargo, or even sold or scrapped
, the report said.
By 2030, American railroads will lose about $5 billion
in revenue as demand for U.
S.
utility coal falls to about half of 2020 levels, according to a Moody's report released Wednesday.
The BNSF Rail and Union Pacific regions saw the largest declines in thermal coal demand due to the Powder River Basin concession, while the Canadian state and the southern Kansas City region had the least
demand for thermal coal.
Moody's estimates that coal's share of U.
S.
power generation will fall from about 20 percent in 2020 to about 10 percent
by 2030, as the U.
S.
transitions to cheaper natural gas and increased renewable energy generation.
Coal accounted for 23.
9 percent of U.
S.
electricity generation as of June, compared with 27.
4 percent
for all of 2018, according to the Energy Information Administration.
Historically, coal has been the largest commodity for rail transportation groups, accounting for 13 percent
of last year's production, according to the Association of American Railroads.
According to 2018 data, among the seven first-class railroads in the United States and Canada, the highest percentage of coal as a percentage of revenue are CSX and BNSF, at 18.
3% and 16.
8%,
respectively.
Norfolk Southern had 15.
9 percent, while Union Pacific had 12.
5 percent
.
Railways will increasingly rely on exporting coal, which could be a volatile source of demand, the report notes, although railroads have expressed willingness to moderate such volatility
with lower freight rates.
Canadian Railways Canadian Pacific and Canadian National, which also operate in the Illinois Basin, reportedly export the largest volumes, with tonnage equivalent to 87 percent and 80 percent
of their annual coal revenues, respectively.
U.
S.
export volumes are largely geographically limited because there are few export channels in the western U.
S.
, mainly served
by UP and BNSF.
The growth in demand for multimodal transport will mitigate revenue losses while also improving service levels
.
In the long run, however, railways run the risk of underutilizing the
network.
As coal demand declines, railroads must assess whether parts of the coal network can be used to transport other cargo, or even sold or scrapped
, the report said.
