Washington (Platts)--21May2007

The major US coal-hauling railroads are battling forest fires, floods and
other operational hurdles that are hampering their ability to haul the
commodity, while north of the border, one of the major Canadian railroads is
trying to run trains while its main maintenance worker union is on strike.

Those challenges have contributed to overall declines in coal hauls in the US
and Canada in recent weeks. Coal shipments on US railroads were down 7% in the
week ending May 12, compared with the year-ago week, according to latest data
from the Association of American Railroads. Year to date, coal shipments on US
railroads were down almost 2% to slightly below 2.6 million carloads. 

A midwestern coal shipper noted that coal trains have been running slower in
the past few weeks, but he said he is not worried now because inventories are
sufficient to allow the utility to weather a temporary slowdown in shipments. 

"We can take this swing in deliveries for the time being," he said. "But if
this continues, we're going to be in trouble."

The shipper said coal stockpiles have been flat at his plants in the past
several weeks, following months of steadily rising inventories. 

BNSF Railway has been running trains at lower speeds over the past two months,
he said. The railroad explained to him that mines are slow to load trains, as
some mines have standing water in pits. Some BNSF empty trains were parked as
a result, the shipper said. 

Norfolk Southern trains are running "fairly normal," he said. The shipper
sources the coal in West Virginia, and the shipments are sent through the
Chicago gateway before they arrive at his plants. 

In the Midwest, Norfolk Southern and Union Pacific are working to bring their
operations back to normal following the recent heavy rainfall that flooded
tracks near the major interchanges in Kansas City and St. Louis, where a
significant numbers of eastbound coal shipments are traveling. 

-- Marcin Skomial, marcin_skomial@platts.com