CN's coal-car rates to increase in '07

By Tom Stundza -- Purchasing, 12/27/2006 7:55:00 AM

A trend toward higher railroad rates on coal traffic in 2007 is highlighted by the Canadian National Railway’s tariff rate schedule, with increases averaging $50 or more per railcar on many movements in the U.S. and Canada. For instance, coal shipments moving from Galatia, Ill., to Lansing, Mich., will increase to $1,584/car from $1,523 in 2006.

A number of different factors go into determining railroad rates, according to Jay Roman, president of Escalation Consultants in Bethesda, Md., which provides shippers with rail rate information. He says travel distance is the most significant determination factor, although rates also could be different for shipments in railroad-owned railcars, as opposed to shipper-owned cars. Meanwhile, Roman tells Platts Coal Trader

that CN's hauls in the U.S. tend to be shorter than those of rival railroads—such as the Burlington Northern Santa Fe Railway, which operates services and in the Midwest and western U.S., or Union Pacific, which operates the largest railroad in North America, covering 23 states.

In addition to serving the Galatia mining operations, the CN railroad serves three other mines, all in Illinois—Creek Paum in Ava, Crown III in Farmersville and Liberty in Harco. CN also captures much of the met coal traffic in Canada moving from the western portion of the country for export through ports of Vancouver and Prince Rupert.