Pipelines on Wheels

Less than five years ago, goaded by the competitive threat of coal pipelines and nuclear power generation, a few railroads began experimenting with new operational arrangements and improved equipment for carrying coal. Early in 1963 the first new rate schedules, based on the new carrying concepts, were filed with the Interstate Commerce Commission. Regulatory obstacles were patiently overcome by the end of this year, two dozen railroads are expected to be using unit-train operations, moving one out of every four tons of railborne coal—about 100 million tons altogether—in express trains shuttling between mineheads and generating plants.

On the tracks, the unit-train has taken many forms, involving mileage runs from 30 to 700, minimum tonnage per train from 1,000 to 10 000 annual minimum tonnage from none at all to 6 million, and rates from less than half a cent to nearly 3 cents per ton-mile.

The most sophisticated version of the unit-train concept, dubbed the "integral" train, may just possibly go on the tracks next year. Carrying over 15,000 and perhaps as much as 35,000 tons, loading in little more than three hours and unloading in one, it would feature permanently coupled sections; power units fore, aft, and in-between; facilities that will empty loads by means of rotary dumpers or bottom-opening cars while the cars are still connected and in motion; and double-ended construction to avoid the need to turnabout.

The effort behind this revolution in railroad carrier service—to lower charges per unit of freight through maximum utilization of equipment—promises substantial rewards. But how much coal costs will drop and how widely the new coal-carrying methods will be applied depend on several factors, some of which are still quite amorphous. Establishing the "how much" is complicated by the division of costs among miner, carrier, and consumer. Loading facilities, when needed, are apt to be installed and financed by the coal company; train operating costs are borne by the railroad; unloading equipment, and often cars, have been bought and maintained by the participating utility. These circumstances seriously affect most of the comparisons that have been made between old and new rail rates. Typically, these show a decline of between $0.85 to $1.50 per ton, but the old rate is inclusive whereas the new rate omits shipper and consignee carrying charges of cars and other equipment. Estimates of such charges vary widely. Take, for example, the case of the New York Central's deliveries to the Commonwealth Edison Company of Chicago—a 292-mile run at $1.45 per ton. Recent ICC proceedings cite 59.6 cents per ton of coal as the utility's cost for carrying and maintaining unloading facilities and rolling stock, and another 12.7 cents per ton as the producer's cost for loading facilities. Yet, in another Commonwealth Edison operation, at $1.30 per ton, an Advisory Committee Report of the National Power Survey estimates the additional costs at only 30 cents per ton.

Whatever may be the residual net savings in a utility's fuel costs, 25 cents per ton of coal is the equivalent of one cent per million Btu—a margin more than sufficient for swinging a utility's decision to or from the use of coal, or to or from the use of railroads for moving it.

As to whether the new transportation techniques will be widely used, answers are more speculative. They turn upon the portion of total coal consumption the express-shuttle trains can profitably handle. According to one equipment builder's estimate, the greatest efficiency is reached in an annual movement of 450 million ton-miles per train, though this may be put together in a variety of combinations, not all necessarily going to the same generating facility. Thus, if 300 miles is taken as the current average coal haul, only generating plants that consume at least 1.5 million tons per year would benefit from the full efficiency of such operations. These comprise about 8 percent of the total number of generating plants, regardless of the distance from mine, and use not quite a third of the coal tonnage burned in all utilities on which the Federal Power Commission reports in detail. If the efficiency threshold were lowered to include plants using at least 1 million tons, 17 percent of all plants and nearly a half of all coal burned would become "eligible." As plants grow larger and therefore qualify, the effect on coal is bound to be far-reaching unless unforeseen diseconomies swallow large parts of the savings.

At this stage, variations in the pattern of development are numerous, suggesting that unit-train arrangements can produce worthwhile savings at levels of efficiency lower than the suggested optimum. There is the prospect, for example, that small-size neighboring plants might cooperate in profitably using the new transportation. On the other hand, the fact that some of the largest generating facilities locate at monmouth or close to a mine may set limits on the scope of unit-train operations. Whether such operations can make coal competitive in areas accustomed to using other fuels is a matter of some debate. As an instance: the West Coast Subcommittee of the Fuels Special Technical Committee of the National Power Survey sees no market for coal in California, yet other experts have pegged California's future coal consumption at no less than 12 million tons per year if coal were to be carried by integral trains from New Mexican or perhaps southern Utah fields. At a different level of speculation, it's a nice question whether California, now battling air pollution from petroleum, would welcome a potential new polluter in the shape of coal.

When all is said and done, in order to retain their competitive advantage over coal pipelines, the coal-carrying railroads seem to be turning themselves into pipelines on wheels. The unit-train operation, especially the projected integral train, exhibits many of the economic characteristics of the pipeline: high sunk cost, low operating costs, importance of high load factor, vulnerability to seasonal and other variations, and relative inflexibility generally. But while smaller-diameter branches can be grafted onto a pipeline to serve new customers off the main route, the unit-train at its most efficient serves one customer only. Where, as a second option, several customers along a given line are served, each must be equipped to unload under the technologically and administratively exacting conditions imposed by the economics of the rapid large-volume movement.

Thus, many of the features that hitherto have been considered a handicap peculiar to pipelines are going to be shared in varying degrees by the railroads themselves. There is a further hazard. The tendency of utilities to assume the burden of owning rolling stock may become stronger as more highly specialized equipment is introduced. Should this trend develop, the ties will have further reason to keep a sharp eye on the competitive standing of other means of energy transportation: not only coal pipelines, but extra-high voltage wires which carry energy derived from distant hydro locations or generated at the minemouth. Neither means of transportation has yet fully ripened, but each is bound to act as a spur to continuing technological advances in bulk carriage of coal. The consumer is interested above all in lowest cost per energy moved. All three methods hold promise for reduction in the cost and price of electricity.