Coal Collaboration Keeps Electric Utilities Out of the Dark

CPFR is not limited to consumer products and high-value goods. Take coal for example, and tons of it. Responding to stricter environmental standards, electric utilities have reached out to the largest source of low-sulfur coal, the Powder River Basin (PRB), located in Wyoming and Montana. In 2000, Powder River Basin mines produced over 350 million tons of sub-bituminous coal, most destined for utilities in the Midwest, Southwest, and East. Serving these massive coal fields, the Burlington Northern and Santa Fe Railway (BNSF) moves over 280 unit trains each week to supply electric utilities as far east as Florida. Each train has 120 railcars, for a total payload of nearly 14,000 tons of coal.

A 60-Mile Backlog
In the spring of 1999, BNSF found that it often had 20-40 empty coal trains staged for Powder River Basin loading at the various mines, often with locomotives and train crews on board. Tom Kraemer, group vice president for BNSF’s Coal Business Unit, elaborated: “Because utilities added additional trainsets to ensure mine loading slots, we were so backed up that at one point these empty trains consumed over 60 miles of BNSF sidings and trackage.” As a result, train cycle times increased, further aggravating the congestion.

The problem, addressed in a focus group requested by the Western Coal Transportation Association, was that mine producers and utility consumers had different expectations about mine loading and tons to be delivered. A monthly reporting process ensued, based on email, fax and phone. BNSF then tried to reconcile the supply plans of the mines with the demand plans of the electric utilities to ensure the correct number of dedicated train sets. Even this rudimentary approach led to substantial benefits, smoothing the coal supply chain and eliminating many bottlenecks and delays over the last 18 months. But the time-consuming and cumbersome paper process included only 25 percent of the utilities.

On January 25, 2001, BNSF launched a web-based collaborative forecasting tool for coal that is expected to broaden the participation and provide additional benefits for the mines, utilities, and carriers. Located in a secure area of the BNSF web site, the Coal Forecasting Tool allows mines to accurately report the total tons of coal they will produce, while utilities can indicate coal demand. The information is only available to the specific mine and utility involved in each move. Any discrepancies in supply and demand forecasts are quickly apparent and BNSF seeks resolution between the supplier and customer. The application will allow forecasts up to 13 months into the future, however the focus is on the next 30-90 days.

On the 6th day of each month, the forecast is “locked” for the current month, allowing BNSF to develop train operating plans designed to ensure an even flow of coal from BNSF-served mines to utilities, and other coal receivers across the country. The operating plans convert the coal tonnage forecasts into trainset requirements based on the mine origins, utility destinations, expected transit times on BNSF and its connecting railroads, maintenance-of-way activity, and other variables. All relevant parties are able to view the consolidated supply and demand forecast to determine that all requirements have been met.“This tool is unique for our industry in that it allows all parties to see what each is expecting in real time,” said Tom Kraemer. “It’s amazing what can happen when everyone is on the same page.”