A popular monthly railroad publication recently said that in today’s railroad parlance double-stack container trains should be regarded as the successor to yesterday’s coal trains. The point was that double-stack container trains had replaced the age-old proliferation of coal trains that dominated much of the railroad network.
That perspective is worth noting for several reasons. First, while railroads (and barge lines) have seen a large permanent decline in coal volumes — about 30% overall — there is still significant tonnage being moved. Second, at least for railroads, there has been growth in other traffic, notably domestic and foreign containers. However, the freight revenue per unit of traffic for containerized cargoes is considerably less compared to coal.
The viability of the overall traffic base is having an effect on reported profits and shareholder stock prices. Publicly traded railroad stocks today are near record highs. This is particularly true for the two eastern coal hauling railroads that are most affected by the decline of the Appalachian coal market.
The decrease in coal volumes moved via rail and barge is not a permanent negative in terms of growing the traffic base. For barge lines, that is the rub. Outside of coal, the traffic base must grow and take up the slack. Railroad shipment sizes, ranging in weight from 25 tons for containers to 110 tons for bulk cargo, are much smaller than 1,500-ton barge loads. But eventually containers or freight cars are marshaled into trains ranging from 5,000 to 10,000 cargo tons, which is more suggestive of barge tows.
The barge lines need to secure large volume shippers that are not time sensitive to low speeds and operations disruptions that occur on the waterways. Unfortunately, this largely prevents the fastest growing freight sector, containerized cargo movements, from expanding on the rivers.
When the coal decline began it appeared to some that the handwriting was on the wall for the traditional coal hauling railroads. Now five years into the long-term decline of coal, these railroads have grown and prospered while losing about one-third of their traditional coal base.
Barge lines should be able to see the same results.