CSX's coal delivery times have improved under the railroad's new working model and it is collaborating with some customers on ways to aid coal generation levels at the power plants it services, Chief Sales and Marketing Officer Fredrik Eliasson said Wednesday.
During a presentation at the Citi 2017 Industrials Conference in Boston, Eliasson said that under the company's new precision railroading model, coal unit train transit times have fallen 27% in three months to an average of 2.3 days in May from three days in March.
He also said many coal-fired utilities the railroad serves are being utilized at a "very low level" and CSX is working "two to three" test cases with customers to try and move some of coal plants up in the dispatch chain.
Eliasson said while "we didn't have a winter" and "not a lot of summer yet," the domestic thermal coal business has had a "fair amount of help" from higher natural gas prices, which is helping to encourage coal burn. He said Henry Hub gas prices are around $3/MMBtu at the moment, even following recent declines, compared with around $2.50/MMBtu a year ago.
Coal inventories have fallen "quite significantly" year over year at utilities in the South, he said, and the summer weather will be "quite telling" on coal demand through the end of this year and for expectations for 2018.
