The mass switch over to Natural Gas from Coal may have been accelerated by the Obama Administration’s EPA super tightening of the Power Plant Exhaust Emissions, through its “War on Coal,” but these plants would have changed fuels or closed anyway, as many were retirement age, having lived to or past the useful designed/anticipated lifespan of the plant. Seeing coal die off and seeing where the coal plants were being replaced on the gas distribution system for which I once worked, the railfan in me didn't wanted to admit was that 1) the plants that closed immediately were old and 2) the burning of coal produced enough toxic Mercury laden coal ash, which could poison the drinking water supply they used to make steam and generate electricity. The changeover to Natural Gas as the premier fuel to make electricity was an Economic Disruption and I first saw it in the early 1990s, when Progress Energy purchased North Carolina Natural Gas to build a 30" gas transmission pipe from the Williams-Transco pipeline connection in Davidson/Mt. Mourne, NC to its new Gas Turbine Electric Plant in Hamlet.
Likewise, in Trains Magazine Professional Iconoclast column, John G. Kneiling wrote about traction motors on Railcars, dispersed in trains, to even out tractive effort, lessen broken knuckles and the breaking in two of trains. While it was again HERESY to readers of THE Magazine of Railroading, we came to see Radio Controlled Distributed Power become the norm on ALL class 1 railroads, a technology perfected on the Southern Railway. It too was an Economic Disruption, eliminating "Pushers" in most places where they'd worked for decades.
Kneiling also told readers in the 1960s and 1970s that Pipelines and Ships were more efficient forms of transportation than trains. It was also HERESY to readers of Trains Magazine, who were mostly railfans, to think that a pipeline could replace a railroad. Besides, how would a bulk commodity such as coal, be transported efficiently in a pipeline? No way. Not happening. No, coal as a commodity on the railroads would never die. Except that it did.
Kneiling also told readers in the 1960s and 1970s that Pipelines and Ships were more efficient forms of transportation than trains. It was also HERESY to readers of Trains Magazine, who were mostly railfans, to think that a pipeline could replace a railroad. Besides, how would a bulk commodity such as coal, be transported efficiently in a pipeline? No way. Not happening. No, coal as a commodity on the railroads would never die. Except that it did.
In Economics we learn about products that can replace others. We call them a Perfect Substitute. We didn't consider was that while Business Leaders weren't just looking for a Perfect Substitution for Coal. Natural Gas COULD be used directly in old Coal Fired Steam turbine electric generation plants, although it would not be as efficient , because the boilers were optimized for coal fuel. So coal was killed off by a Gaseous Fuel that could fuel a simpler powerplant that required less people to operate it and replace the coal, the coal cars, the trains, the railroads, the rotary dumpers, and the bulldozer and stoker operators. Yes, it had fewer BTU’s of energy than Coal, but it also had fewer Exhaust Emissions than Coal.
While Natural Gas is not a Perfect Replacement for Coal, as it's less energy dense, but, it required far fewer people to operate the plants and transport the fuel, less maintenance on the plant and the plants are far less expensive to build and leave far fewer solid and liquid pollutants that can poison the water supply. What no one considered was that as Gas Turbines were cheaper and quicker to build. The cost to build a pipeline to support them could be easily offset by the the costs paid to railroads for the transportation of coal. And far beyond these reasons, the employee and equipment costs for a utility plant to handle coal solid fuel were severely cut. The entire process was simplified and simplification saves money.
While Natural Gas is not a Perfect Replacement for Coal, as it's less energy dense, but, it required far fewer people to operate the plants and transport the fuel, less maintenance on the plant and the plants are far less expensive to build and leave far fewer solid and liquid pollutants that can poison the water supply. What no one considered was that as Gas Turbines were cheaper and quicker to build. The cost to build a pipeline to support them could be easily offset by the the costs paid to railroads for the transportation of coal. And far beyond these reasons, the employee and equipment costs for a utility plant to handle coal solid fuel were severely cut. The entire process was simplified and simplification saves money.
Early Gas Turbines were fuel hogs, requiring a tremendous amount of fuel to generate the “thrust” that could be turned into mechanical work. It showed, as Airliners were an expensive form of transportation, mainly to cover fuel costs. But the “solutions" to these problems were being figured out by the government and airline companies: The US Air Force discovered that by injecting water into the superheated exhaust of a gas turbine, this it could generate additional thrust during take off to get its big B-52 Bombers airborne. It was a win-win option for the Air Force, as the water was used up on take-off, reducing the weight and increasing the power to weight ratio. But later, some airlines (a story about National Airlines was featured on 60 Minutes) discovered that Turbo Jet/Gas Turbines could be fairly fuel efficient at steady throttle settings, below full throttle.
The Gas Turbines used in power generation ARE JET AVIATION ENGINES. They use just about as much water injected after the combustion chamber to generate additional thrust to turn the generator “turbine.” Additionally they can pass the exhaust gases through a heat exchanger to support a “waste heat steam turbine,” to generate "free" additional electricity through the waste heat in the exhaust flow.
Gas Turbine plants are often located near enough to a body of water, where the supply needed to make more power without using more gas, is considered virtually unlimited. The additional electricity from harnessing the waste heat energy through a steam turbine to produce additional "free" electricity further lowers the cost of electricity produced by natural gas.
The directional drilling and Fracturing of Shale to release this gas trapped in the rock increased the available gas supply (estimated to be at least 100 years), while at the same time, lowering the cost with the lower gas prices . Suddenly coal was simply no longer king, the preferred fuel for generating electricity.
Much like the transition from the steam locomotive to the diesel electric or gas turbine electric locomotives, the internal costs were killing the older steam plants. Natural Gas did for America’s power plants what the Diesel Electric Locomotive did for America’s railroads: It cut the required personnel (Operations and Maintenance) and (Capital) facilities that were needed to operate these industries. The emissions reduction is a pleasant by-product.
The Gas Turbines used in power generation ARE JET AVIATION ENGINES. They use just about as much water injected after the combustion chamber to generate additional thrust to turn the generator “turbine.” Additionally they can pass the exhaust gases through a heat exchanger to support a “waste heat steam turbine,” to generate "free" additional electricity through the waste heat in the exhaust flow.
Gas Turbine plants are often located near enough to a body of water, where the supply needed to make more power without using more gas, is considered virtually unlimited. The additional electricity from harnessing the waste heat energy through a steam turbine to produce additional "free" electricity further lowers the cost of electricity produced by natural gas.
The directional drilling and Fracturing of Shale to release this gas trapped in the rock increased the available gas supply (estimated to be at least 100 years), while at the same time, lowering the cost with the lower gas prices . Suddenly coal was simply no longer king, the preferred fuel for generating electricity.
Much like the transition from the steam locomotive to the diesel electric or gas turbine electric locomotives, the internal costs were killing the older steam plants. Natural Gas did for America’s power plants what the Diesel Electric Locomotive did for America’s railroads: It cut the required personnel (Operations and Maintenance) and (Capital) facilities that were needed to operate these industries. The emissions reduction is a pleasant by-product.
The Economic Disruption of power companies switching from coal to gas to produce Electricity suddenly cut the railroads' coal traffic with the conversion to newer Gas (fired) Turbine Plants. North American railroads scrambled to search for a profitable replacement commodity for lost coal traffic. Intermodal, particularly Long Haul, Double Stacked, Intermodal Container trains was the new commodity the Railroads banked upon to deliver a reliable income. But a new Economic Disruption was coming with the Panama Canal expanding its locks, to meet the demand of already built and in service ships too large to transverse it’s canal. The larger ships carried even more containers, reducing the cost per container and increasing profit margins for shipping companies.
I had an awakening, an epiphany, when former Norfolk Southern Corporation Chairman Wick Moorman said “Don’t look at where the ball is at: Look where the ball is going to be.” At the time Moorman was justifying an unpopular move of part of the Corporate Headquarters out of Roanoke, VA, historically the headquarters of the Norfolk & Western Railway. This was a tough decision, as closing the Roanoke Corporate Office would decimate jobs. However, when I read the quote, I got "it."
Those of us who are railfans, too often focus on the nostalgia of the past and don’t look toward the future of business. Apparently, Wick Moorman looks at the past too, but in the business world, he limits his business focus to the history of what brought Norfolk Southern to the present.
So, I began to look at the North American Railroad System from a business perspective, from both of my career fields; Procurement and Logistics. When you look without the jaundiced view of a railfan, you can begin to see the inefficiencies of the industry, where competition happens and where threats lie.
I had an awakening, an epiphany, when former Norfolk Southern Corporation Chairman Wick Moorman said “Don’t look at where the ball is at: Look where the ball is going to be.” At the time Moorman was justifying an unpopular move of part of the Corporate Headquarters out of Roanoke, VA, historically the headquarters of the Norfolk & Western Railway. This was a tough decision, as closing the Roanoke Corporate Office would decimate jobs. However, when I read the quote, I got "it."
Those of us who are railfans, too often focus on the nostalgia of the past and don’t look toward the future of business. Apparently, Wick Moorman looks at the past too, but in the business world, he limits his business focus to the history of what brought Norfolk Southern to the present.
So, I began to look at the North American Railroad System from a business perspective, from both of my career fields; Procurement and Logistics. When you look without the jaundiced view of a railfan, you can begin to see the inefficiencies of the industry, where competition happens and where threats lie.
As I realized in early 2015, that the new lane of the Panama Canal was to soon be completed, I had an uneasy feeling about railroads overconfidence in the revenue that would be made from intermodal traffic. So I started to research how the ability for larger Container Ships docking at ports on the Eastern Seaboard would affect container traffic on the railroads. The basics of what I’d found out was:
- 70 percent of consumer markets (Demand - read population center destinations for containers carrying consumer goods) are east of the Mississippi River and
- Savannah, GA is the 4th largest port by container volume behind 1) Los Angeles, 2) Long Beach and 3) New York/North (New) Jersey in Intermodal Container TEU (20' Equivalent Unit) Lifts
Knowing what I do about the “Hub and Spoke" Distribution Systems for packages, mail and freight, I perceived a serious threat for long distance intermodal freight trains from trains and trucks serving East Coast Ports. Then I did what I learned to do in the Business World, a SWOT Analysis. SWOT is an acronym for:
- Strength
- Weakness
- Opportunity
- Threats
Way back in 2015, I wrote this blogpost showing the Intermodal routes from “the left coast” to the east, where the major markets lie. As the markets for goods imported into the US like primarily in the east, due to population density, I discovered that EVERY WEST COAST PORT ROUTING OF CONTAINER TRAFFIC HAS WEAKNESSES (the Primary weakness is Distance Traveled by rail, and the secondary Secondary weakness is Crossing Mountain Ranges). But the other HUGE issue I did not look at is the Cost of Unloading Containers from ships at West Coast Ports and getting them on to trains heading toward markets in the east. The International Brotherhood of Longshore and Warehouse Union commands an incredible wage and benefits package. It last went on strike back in 2014, threatening the economy. There were pictures in the News Media showing many, many ships anchored, waiting to get in to the LA/Long Beach Twin Ports to unload their containerized freight.
While this Blog has been primarily read by rail enthusiasts on the Carolina Rails and SE Rails Yahoo groups, now there is an article that proves what I’d theorized: West Coast Ports are starting to lose traffic in favor of East Coast Ports that are closer to the end market destinations of the freight packed into those containers. Please note the decline in container lifts and railcar traffic from the twin ports of los Angeles and Long Beach California, at the end of the article.
When coal traffic dried up and blew away, like a deciduous leaf in late fall, some theorized that railroads might die without the revenues earned on coal traffic. Others said that railroads would replace the lost coal traffic and its revenue with Intermodal freight. That’s not going to happen either, as the long distance intermodal is what’s really profitable.
This economic climate around the railroad industry is beginning to feel like the late 1960s and early 1970s, with railroads "playing defense” and just trying to hold on through disruptive economic change. This time, however, it's multiple technological disruptions at the same time, that are causing the railroads to "play defense." If the railroads are going to survive - and I certainly hope they do - they’d better get really good at short haul intermodal service, with quick, short trains and do it in a big hurry.
This economic climate around the railroad industry is beginning to feel like the late 1960s and early 1970s, with railroads "playing defense” and just trying to hold on through disruptive economic change. This time, however, it's multiple technological disruptions at the same time, that are causing the railroads to "play defense." If the railroads are going to survive - and I certainly hope they do - they’d better get really good at short haul intermodal service, with quick, short trains and do it in a big hurry.
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