Washington (Platts)--30Apr2009

US power plant operators with record coal stockpiles are idling unit
trains at rates rail industry veterans say are unprecedented.

Reduced electricity demand, increased switching by generators to natural
gas and faster railroad cycles have combined to create a glut of coal at power
plants across the US, utility and railroad industry sources said.

David Nahass, senior vice president of Railroad Financial, a Chicago firm
that advises car leasing and purchase deals, estimated that about 150 coal
train sets--each with 120 cars--are parked in North America, which, he said,
has a fleet of 283,000 cars or 2,350 train sets.

Officials at a pair of Midwest utilities said this month they simply
have too much coal to justify running all their cars. One of the utilities has
parked a dozen of their nearly 30 train sets. The other utility currently has
nearly a third of its 19 sets parked.

Both officials, speaking on condition of anonymity, said cycle times out
of Powder River Basin mines have gone from a week to as little as four days.

"Up until probably three or four months ago, we didn't have anything
parked. In fact, we were running our full tonnages plus a few deficit trains
from railroads because they weren't keeping up their cycle times," one of the
utility officials said. "[A]t the pace we're going, we're not going to need
anything in the fourth quarter," he added.

The drop in demand also has affected railroads. CSX idled 3,000
cars in their 21,000-car coal fleet as of last week, said Jack Burgess,
director of origin coal sales for the Jacksonville, Florida, carrier. The
railroad would typically have 400 to 600 cars idled to allow for maintenance
backlogs or surge capacity.

At the end of October, "we didn't have any cars in storage, that's
how quickly things have turned," Burgess told Platts.

The Association of American Railroads estimates 460,000 cars out of the
1.6 million-car North American fleet is parked, said Tom White, a spokesman
for the Washington trade group.

The increase in parked cars solves one problem for utilities--reducing
the number of tons being delivered--but it presents another problem. Tracks
that were already empty are getting emptier and railroad run rates may
actually be getting shorter, the utility source said.
--Peter Gartrell, peter_gartrell@platts.com