Student Post: International Coal Transportation

Today’s reading had a section on the United States’ transportation of coal within our borders. However, the United States is also a major exporter of coal. It was estimated in 2010, that the United States exported 74 megatons of coal. That would be the 4th largest exporter of coal in the world behind Australia, Indonesia, and Russia.

According to worldcoal.org, coal transportation accounts for only 16% of the coal that is consumed in the world. Most of the coal that is procured is consumed in the country of origin. That being said, over 70 countries use coal, and roughly 50 commercially produce coal. The coal needs to get from place to place.

With the increased demand of coal in the world, shipping coal over the seas has become a popular mode of transportation. However, the increase in fuel costs have led to an increase in freight costs across the board. Increased freight costs have stymied the ability of developing nations to ship coal cost effectively.

For example, the Indonesian National Shipowners Association stated that 285 vessels would be needed to handle the shipment of coal exports from Indonesia. Currently, only 75 ships are owned and used by Indonesian companies. The remaining ships are contracted out at a cost to the coal distribution centers. Thus rising the overall cost of coal.

Theenergylibrary.com states that international shipping of coal increased from 498 Mt in 1990 to 917 Mt in 2007. With the rise in international shipping there is concern because ocean transport requires five things: 1) transportation from mine to port, 2) coal handling facilities at the export port, 3) ocean carrier networks that can handle the exports, 4) coal handling facilities at the import port, and 5) transportation from port to customer.

In 1979, the National Research Council Maritime Transportation Research Board issued Critical Issues in Coal Transportation Systems: Committee Report. In this report it was emphasized that the U.S. make accurate export estimations regarding the transportation of coal. This report states: “[t]he underestimation of exports would lead to transport congestion and missed sales opportunities. An overestimation would lead to costly excess capacity at a number of shipment points.” These ideals can still be used today.

The basic theme of the research regarding international shipping relates to cost efficiency. The United States imports many manufactured goods from around the world. In connection with that, coal is a major source of energy in the nations the United States imports goods from. If the cost of energy raises the cost of production in those countries, then the cost of those manufactured products is raised here.

It is a cycle that needs to find a more efficient way to save money around the globe. Extra costs from shipping inefficiencies to port taxes have raised prices of consumer goods.