Chinese Coal Demand Spurs Increase in Montana Rail Traffic
Monday, March 21, 2011 - 02:05 PM
(Helena, MT -- Jackie Yamanaka, YPR) A Montana short-line railroad has gone from laying off workers to hiring them back and planning for further expansion as Chinese demand for coal pushes some American freight lines to capacity.
Jim Lewis is director of sales and marketing for Montana Rail Link, a regional railroad that's seeing a boost in traffic. Lewis says rail use is up across the nation. Neighboring Burlington Northern-Santa Fe Railway’s northern route, known as the Hi-Line, is at capacity.
“There’s only so much track,” Lewis says. “We’re kind of a safety valve for BNSF to run traffic across our railroad so they can handle all of the traffic that they have.”
He just returned from a coal conference in Florida. He says mine executives talked about the growing coal export market, particularly to China.
“A couple of the CEO’s of large mining companies described it as we’re entering into a coal super-cycle,” Lewis says. “And it was stated in the conference that Asia represents 90 percent of a 4 billion ton global demand for coal.”
It’s expected coal mines in Montana and Wyoming’s Powder River Basin will be called upon to help meet that demand.
Burlington Northern-Santa Fe Railway hauls the coal from those mines where it’s turned over to Montana Rail Link at Laurel, Montana. The Missoula, Montana-based railroad owns track between Laurel and Sandpoint, ID and has track rights to Spokane, WA.
Lewis says besides the global demand for commodities, there’s also an increase in demand domestically.
He adds the recent rise in fuel prices and the decline in commercial truck companies has shippers looking at rail as an affordable option.
Just one year ago, the outlook was bleak for Montana Rail Link. The continuing decline in the wood products industry culminated in the closure of the Smurfit Stone paper mill in Frenchtown, Montana. The company was one of Montana Rail Link’s largest customers.
Shortly after, the company laid off about 50 employees. Last November, Lewis says Montana Rail Link hired them back and is looking to hire another 45 employees by the end of April because of the rebounding world economy, led by the demand for coal.
Lewis also thinks the demand for paper products is going to grow for China and India. He says that could revitalize the wood products industry, in Montana, the Pacific Northwest , Canada, and elsewhere.
“I for one feel that the demand is going to be be there and the future is bright for Montana Rail Link,” Lewis says.