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exceed 200 by the end of the year. A visit to their website (www.bnsf.com/shale) will show how seriously BNSF has committed itself to the oil shale business. Coal units are up 1.4% through August compared to the same period last year. This is a continuation of higher volumes that BNSF began to experience in June 2013 as demand for Powder River Basin (PRB) coal increased with a rise in natural gas prices and utilities returned to greater coal-fired generation as the best value. The increase in PRB burn took place against the backdrop of declining invento- ries that was already under way prior to natural gas price increases. During the first half of 2014, PRB burn was up almost 25 million tons, or 13%, over the same period in 2012; it was up 6 million tons, or 3%, over 2013. Even though BNSF has under-delivered against this coal demand through the winter and spring, it has con- tinued to grow the number of coal sets across its coal corridors and is operating nearly 500 sets. The railroad expects this higher demand to continue for the rest of 2014 and into 2015, as it is not meeting current coal demand due to service challenges. BNSF is focused on meeting its contract obligations and working with those cus- tomers who want more volume than their contact declaration, but there are also cus- tomers for whom it is not meeting its cus- tomer declarations. BNSF will move more coal the latter part of this year and next year as capacity is added. It will continue rebuilding stockpiles in 2015, with some completing in 2016. The central region has continued to be a challenge as a result of weather impacts in the north. These have necessitated vol- umes being rerouted on to the coal routes during the continued high demand for coal. As the rerouted traffic moves back to the north, BNSF will see more gradual improvement; the number of coal sets in operation will continue to be very high. As velocity improves the number of coal sets will decline; the railroad will be able to move more volume with fewer sets. This will also improve customer service as stockpiles are rebuilt. The northern region will see incre- mental improvement as track mainte- nance concludes, but should see larger improvements as track expansion pro- jects come online. Specifically, the sub- divisions from western North Dakota to t h e W e s t C o a s t s h o u l d p e r f o r m m u c h better in the latter part of the year as key capital projects come into service. These projects will provide added throughput, w h i c h w i l l i n c r e a s e v e l o c i t y f o r g r a i n , crude oil and coal volumes. A Bitter Irony BNSF has worked for almost 10 years to saddle coal producers and coal-burning utilities with the sole responsibility for stopping rail borne coal dust. The railroad has recently found it necessary to build a surfactant respraying facility in Pasco, Wisconsin, in an effort to reduce coal dust from trains entering the Columbia River Gorge. Possibly the result of a Sierra Club lawsuit, the facility is scheduled to open in December. CSX: Actively Preparing to Haul More Coal In the first quarter, CSX pulled approxi- mately 5,000 rail cars out of storage to accommodate growth, with an emphasis on coal, grain and metals. In addition to aggressive car purchases over the past three years, CSX is now undertaking the largest car rebuild program in its history, including 470 stainless steel Coke Express cars and 1,400 stainless steel triple hop- pers that have been refurbished and are now hauling freight. In addition to the rebuilt equipment already in over-the- road service, another 1,100 triple hoppers are expected to be complete by the end of the year. Work will soon begin on approxi- mately 3,000 coal gondolas that will be converted from traditional carbon steel into hybrid stainless steel-aluminum cars and placed into service in 2015. CSX is investing in a new facility in Kentucky that will support the grain harvest and increas- es in Illinois Basin coal shipments. The export coal market continues to show volatility as global supply outpaces demand and pressures global market pricing for both thermal and metallurgi- cal coal. Expectations for CSX export coal movements in 2014 remain in the mid- 30-million-ton range. Following three years of transition in the domestic coal market, the extreme winter conditions forced utilities to draw down their coal inventories, revitalizing the domestic coal market in the first half of the year. Domestic shipments increased 7% in the first quarter and 15% in the second quar- ter. CSX expects growth to continue in the double-digit range. The company is investing in a new coal unit train process- ing facility in Kentucky that will support the increased growth of coal from the Illinois Basin as well as increased move- ments of grain unit trains. Due to the closure of mines in Northern Appalachia, CSX lost $295 million of coal revenue in 2013 after losing over $500 mil- lion in 2012. The company seeks to offset the loss of coal traffic with a 6-8% annual increase in intermodal traffic. Norfolk Southern: Seeing Unexpected Steady Coal Traffic Increase Norfolk Southern's (NS) internal projec- tions for 2014 generally predicted flat growth, with increases in intermodal and crude oil shipments partially offsetting expected declines in coal. Volumes began to increase in late March, which NS initial- ly thought reflected pent-up demand from the severe winter. However, volume increases have been sustained and reflect- ed across nearly every business segment and have run well ahead of the pace of the overall economy. For the second quarter of 2014, traffic was up 8% over the second quarter of last year, which includes double-digit increas- es in intermodal along with gains in both merchandise and coal traffic. To put the volume growth in perspective, NS's week- ly volumes averaged about 153,000 loads in the second quarter of this year, com- pared to 141,000 the year before. NS only saw volumes exceed 150,000 loads in two weeks of all of 2013. Overall coal volume increased 3% in the second quarter of 2014 over the second quarter of last year. Utility coal shipments are expected to be flat throughout the remainder of the year due to mild summer weather and falling natural gas prices. Coal volumes will be tempered by weaker export metallurgical and thermal coal market con- ditions along with lower domestic metal- lurgical coal shipments. In sum, NS expects continued volume growth across most of its intermodal and merchandise market segments, but reduced coal volumes in the second half of 2014. Dave Gambrel, a private transportation consultant, is the former director of trans- portation for Peabody Energy. He may be reached at david.gambrel@gmail.com. t r a n s p o r t t i p s c o n t i n u e d November 2014 www.coalage.com 25