An Analysis for Coal Transportation and Demand in US and International Markets

An Analysis for Coal Transportation and Demand in US and International Markets

Ahmet Yücekaya (Kadir Has University, Turkey)
DOI: 10.4018/978-1-7998-1397-2.ch014

Abstract

Since coal resources are located around the world and often far away from where the coal is consumed, transportation is important. The industries that use coal such as power plants, industrial plants, coke plants, and commercial institutions usually prefer different transportation methods. The demand in these industries and the transportation methods they use differ over time. This chapter analyzes the international coal transportation and demand. An analysis for the US coal market and the transportation to industries along with the methods that are used between 2001-2015 are presented. A trend analysis was performed to show the long-term demand for each transportation method in each industry. Such analysis is also useful as it allows observing the coal demand from each industry. Analysis results reveal the change in coal amounts that are transported to each industry using the railroad, truck, and other methods.
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Background

The transportation and logistics issues of the coal have to be carefully analyzed in terms of production and shipment to decrease the total cost. The deregulated markets put cost pressure on the fossil fuels especially on the coal, however, the coal-fired power plants are still the major coal consuming entities as the energy demand grows. On the other hand, the power plants need to be cost competitive to be dispatched in the power markets (Whittington and Bellhouse, 2009). The emission costs bring extra costs for coal plants that also affect their competitiveness. They need to select the right coal resource to generate power with a lower cost (EU, 2008), (Golombek et al., 2005). Other industries that use coal include industrial plants, commercial institutions, and coke plants. It is observed that the demand for coal is decreasing due to emissions and pressure against fossil fuels. The major transportation method that is used for international coal transportation is the sea. However, for the domestic coal transportation-railroad, truck, river, tramway, conveyor, slurry pipeline, great lakes, and tidewaters are used.

The average increase in energy demand is 7% per annum around the world (EIA, 2017). On the other hand, fuel prices have experienced turmoil and fluctuation over the years. An analysis of the coal demand and transportation is needed to see the change in sectoral demand and transportation methods. A long-term trend can be expected for the sectoral coal demand, as the coal is one of the oldest energy sources. The researches on the transportation and production of coal are mainly in the reports. There are limited researches on the transportation and logistics of the coal both in the international and national level.

Key Terms in this Chapter

US Coal Market: refers to production, transportation, and consumption of coal in the US where the price, demand, and tariffs are determined.

Slope: A gradient of a line, which is obtained using regression analysis to determine the direction and level of change in long run, based on the past data.

World Coal Market: The coal reserves are distributed around the world and it is exported from the countries with high reserves to buyers. The price, transportation, and distribution are determined based on the international rules and regulations in the world coal market.

Trend Analysis: Trend analysis aims to determine the direction of movement of a time series data using past and current data.

Coal Transportation: The coal is mined, processed and blended before it is carried to its final destination. As it is a bulk commodity, the transportation requires a huge effort and coal transportation refers to steps that are followed to deliver the coal to the desired location.

Steam Coal: Sometimes called thermal coal. The coal that is used in power plants and other energy needing plants.

Coal Production and Consumption: The coal is produced and processed before it is delivered to the final destination. However, not all of the coal is consumed within a country and it is common to export to coal to other countries. Hence, it is required to analyze the production and consumption separately.

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