Modeling U.S. Coal Export Planning Decisions

This paper develops a network-optimization planning methodology for U.S. coal port infrastructure. The model analyzes the economic and geographic impacts of harbor deepening and offshore topping-off, improvements which are considered essential for the U.S. to maintain export levels in the face of lower-cost competition because they enable loading of the largest coal supercolliers. The Coal Logistics System (COLS) is a mixed-integer programming model that captures the interaction between coal types and origins, rail and barge networks, ports and intermodal terminals, economies of scale in ocean shipping, foreign demand for steam and metallurgical coal, and environmental regulation. Model results provide the optimal set of coal flows for minimizing the costs of producing, transporting, and transshipping coal. A base case is calibrated for 1985 in which the model predicts the throughput at each of five major ports within 10 percent of actual historical levels. Four scenarios evaluate the effects of dredging at Baltimore and Norfolk harbors and of an offshore topping-off facility in Delaware Bay on the basis of systemwide cost savings and interport competition. Scenario results indicate that coal traffic alone is sufficient to justify the channel deepening work recently completed at Norfolk or underway at Baltimore, but perhaps not both. The alternative of offshore topping-off of light-loaded supercolliers merits further study. The research demonstrates the applicability of optimization models for analyzing marginal supply regions, geographic and product competition, intermodal competition, competition for port forelands, traffic diversions between port hinterlands, and concentration of traffic. © 1991, Taylor & Francis Group, LLC. All rights reserved