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Coal Dust a Drag on Coal Drags

Posted on: Saturday, 30 July 2005, 03:01 CDT

There will be fewer unit coal trains moving on the joint BNSF Railway/Union Pacific line serving the Powder River Basin during this year's maintenance-of-way season as a comprehensive program involving ballast undercutting and other major work progresses.

In mid-May, BNSF and UP each experienced a track-related derailment on the South Powder River Basin Joint Line within a two- day period. Track stability problems resulting from poor drainage caused by long-term coal dust buildup and recent heavy rains were to blame. The resulting slow orders caused train throughput to fall below the combined average of 63 per day for both railroads; as of late June, throughput was better but still somewhat below that number, which reflected traffic levels prior to the derailments.

As of late last month, BNSF and UP were putting together a track work and ballast repair program that would run through the duration of the m/w season. "The damage done to the roadbed by the combination of accumulated coal dust and significant rainfall over a short time period cannot be totally corrected without physically removing the dust from the ballast," UP said in a customer advisory. "Other plans that are an outgrowth of this effort will include additional supervision of dispatch operations and additional operating and engineering management support at the local level. All these changes are designed to improve the flow of inbound and outbound trains and volume."

Until the m/w program is in place, neither railroad was sure how many trains would be affected, "We encourage all of our customers and partners to continue to operate with the view that operations are not back to normal and that fewer than 63 trains per day will be shipped, on average, during the foreseeable time period," UP said.

Some industry observers were predicting about a 10% throughput reduction. MorganStanley railroad analyst Jim Valentine went with that figure and lowered second-quarter and full-year 2005 earnings per share estimates slightly for both railroads. But he believes the impact will be short-term. "There is secular upside potential from better PRB tonnage and pricing over the next two to three years," he said. "We estimate at a minimum that the western railroads can re- price their coal contracts by at least 15%, which would lead to 16% higher EPS for BNSF and 28% for UP, although it will take a few years for this to occur, as only 15-20% of a railroad's coal contracts roll over in any given year."

Copyright Simmons-Boardman Publishing Corporation Jul 2005

Source: Railway Age

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