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Norfolk Southern committed to invest in coal 'when the volumes come on': CMO

Tucson, Arizona (Platts)--11 Apr 2017 538 pm EDT/2138 GMT


Coal will remain an integral part of Norfolk Southern ahead as the railroad adjusts to a commodity that's future is "more dynamic and more uncertain," Chief Marketing Officer Alan Shaw said Tuesday.

In a keynote address at the National Coal Transportation Association's Spring Conference, Shaw said that while NS has made cuts to its Central Appalachian coal network in the past few years, this year the company has invested in both metallurgical and thermal coal infrastructure as those markets improved, and it will do the same when there are "clear and identified opportunities" in its coal business.

"Clearly, when opportunities are there, we'll invest," Shaw said. He added that the railroad will "make sure we're there when the volumes come on."

Since 2015, NS has taken out of service a 33-mile stretch of track in West Virginia from Elmore to Princeton, a 31-mile stretch of track in Virginia from Dismal to Richlands, idled parts of the West Virginia Secondary, a 253-mile line between Columbus, Ohio, and central West Virginia, reduced train operations at its Knoxville, Tennessee, rail yard and shut down its Ashtabula, Ohio, coal pier on Lake Erie.

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Shaw said Tuesday that NS talked of shutting down Ashtabula for years as volumes began to dwindle.

But the US coal industry, both export and domestic, has seen significant recovery since the end of last year leading to positive revenues and volumes for the railroad, Shaw said. NS coal volumes grew 21.9% in Q1 compared to the first three months of 2016, with totals increasing to 245,771 carloads from 201,671 carloads.

Related podcast: US coal producers disciplined in the face of higher prices, lower stockpiles

A large portion of the volume hike was seen heading to ports that included the NS-owned Lamberts Point loading terminal in Norfolk, Virginia. Lamberts Point loaded more than 3.8 million st in the first quarter of the year, up 47.1%, or 1.2 million st, from the year-ago quarter.

Finn Host, manager at shipper T. Parker Host, told the conference Tuesday his company projects coal exports from Lambert's Point will increase to 12.6 million st this year from 8.6 million st in 2016.

"This year is exactly the year why we continue to have this facility," Shaw said.

Shaw added that with improved markets, today NS has no coal cars in storage, as all 21,000 units in the railroad's fleet are being utilized.

"We're not really sure [where coal will end up], but we know it still will be a valuable commodity in the United States, and we know we still will be a part of that," he said.

--Jim Levesque, jim.levesque@spglobal.com

--Edited by Derek Sands, derek.sands@spglobal.com

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