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Western Railroad Discussion > Coal's decline could cost the railroads $5 billion, says Moody's


Date: 09/09/19 06:35
Coal's decline could cost the railroads $5 billion, says Moody's
Author: Lackawanna484

Moody's Investor Services, a financial rating company, believes the drop off in coal shipments over the next ten years will cost the railroads big time.  With CSX, BNSF and UP losing the biggest % of their business, and CN / KCS losing the lowest.

(Note that this assumption suggests about half of current coal fired plants will still be on line in ten years, and that exports will diminish at about the same rate as thermal coal use.  Estimates made ten years ago proved to be well off the mark.)

Moody's, Standard & Poor's etc are paid by companies to rate their bond and debt offerings.  Their performance in the 2008 financial crash called into question some of the assumptions under their methodology....

https://www.spglobal.com/marketintelligence/en/news-insights/trending/73CxUkyCxg4Ec9br8JtBwA2

 



Date: 09/09/19 10:26
Re: Coal's decline could cost the railroads $5 billion, says Mood
Author: CPRR

This is nothing. Think about all the other non railroad companies and their impact of loosing money.

Posted from iPhone



Date: 09/09/19 11:03
Re: Coal's decline could cost the railroads $5 billion, says Mood
Author: highgreengraphics

Bet they never got their money's worth out of all the PRB expansion, both the mining companies and railroads. I was wrong as I was always the first critic of them not building faster to accomodate new business.

In defense of PSR, one can see that belt-tightening was necessary when so many basics of the business model are being challenged, e.g. that loss of coal traffic highlighting overbuilding and fixed plant being in the wrong place; the extreme expense of PTC thrust upon them; low-emission demands producing locomotives that are more expensive, burn more fuel and do not perform; China export trade threatened; wildly fluctuating levels in oil and ethanol shipping. Add to that eccessive liability, a lot of older infrastructure is ending its useful lifespan, floods, reduced grain traffic, high labor cost, high equipment cost, high maintenance cost, overtaxation, environmentalists, adverse legal climate after grade crossing accidents, trespassing, graffiti, vandalism, theft, and it is a tough climate in which to do business. Also much of society is insulated from any knowledge or appreciation of the vital role rail transportation provides for our economy and national security. Most of that is the railroad's own fault, or what the heck does the AAR do nowdays? Most railroads dropped or seriously reduced their PR Departments after the cessation of their privately-owned passenger service and we are becoming two generations removed from railroads being favorably exposed to the public. That is a paradigm that will not change because PSR out of the sheer necessity is concerned with cost-cutting. Union Pacific has been the one shining holdout with its 4014 tours, just as they raised up the entire industry with their "Automated RAIL Way" slogan of the 1960's, but who among us does not fear that the UP Steam Program program will be mothballed after their 150th and under PSR? UP President Mr. Fritz said "No sacred cows". But again, as distasteful as it is, there is basis in defense of this cost-cutting PSR thing done either overtly. (CN and CSX), by another name (UP and NS) or done without a name (BNSF and CP). Rail freight carriers are not a Public Service, they are a for-profit business, whose profitability has been threatened on many basic fronts. === === = === JLH



Edited 1 time(s). Last edit at 09/09/19 11:37 by highgreengraphics.



Date: 09/10/19 08:12
Re: Coal's decline could cost the railroads $5 billion, says Mood
Author: prrmpup

A very thoughtful post, and I agree with almost everything you say.

A couple of comments. 
Despite what the AAR and railroads have done in the past, and I mean more than a half century, the press is really not interested in good news stories.  They don't sell. On top of that, they don't want to be seen as carrying water for any particular industry. Outside of the northeast, most people's only interaction or notice is taken up by delays at grade crossings or hearing noises they don't want to hear. That UPS package on the doorstep came by rail? Who cares. I just want it on the doorstep. 

UP has kept the steam program going for a very long time. One does wonders how long it will continue. 



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