The cost of coal transportation by railway has increased in China, following a rise in freight rates since February 1 as announced recently by the National Development and Reform Commission (NDRC), a move that may prompt miners to transport coal through road trucking.<br /> <br /> Starting from February 1, the rail freight rate for cargo transport has been raised by 0.01 yuan/ t.km to an average of 0.1551 yuan/t.km ($0.025/t.km) from 0.1451 yuan/ t.km, while the base rate to 16.3 yuan/t.km from 15.5 yuan/t.km, the NDRC said in a statement on January 30.<br /> <br /> This is the fourth time China increased rail freight rates since 2012, with a lower growth compared to 0.015 yuan/t.km in the past two years. The freight for rail cargo transport in China is calculated with the base rate plus the product of freight rate and transport distance.<br /> <br /> For coal transport, the base rate has been increased from 15.5 yuan/t to 16.3 yuan/t, while the freight rate is 0.098 yuan/t.km, up from 0.089 yuan/t.km, the NDRC said.<br /> <br /> The freight rate for coal-dedicated Daqin line, which transport coal from coal-rich Datong in Shanxi province to Qinhuangdao port, as well as Jingqin, Jingyuan and Fengshada lines, increased also by 0.01 yuan/ t.km to 0.1001 yuan/t.km since February 1.<br /> <br /> Rail operators like Daqin Railway Corp. hailed the hike, with Daqin estimating some 2.41 billion yuan revenue increase this year.<br /> <br /> The cost for transporting coal from Datong to Qinhuangdao port may increase 6.61 yuan/t, based on its transport distance of 653 km.<br /> <br /> Coal miners may have to bear the additional cost, given the current slackness in the domestic market, with slim chance to drive up thermal coal prices at coastal ports.<br /> <br /> "Shanxi miners may need to pay 6-7 yuan/t more to rail coal to northern ports, while miners in Inner Mongolia may have to pay 10 yuan/t more, due to longer transport distance," said Wang Xufeng, one senior analyst with coal consultant Fenwei Energy.<br /> <br /> "The hike (in rail freight rate) has made us determined to increase the share of road outbound shipment," said a local large miner. "Coal trucking cost in Shanxi has almost hit the bottom, thanks to the provincial government’s removal of restrictions on road transport since December 2014."<br /> <br /> One Inner Mongolia-based large miner also said his company would choose to ship coal by road, as the trucking cost has been sliding following the drop in fuel prices.<br /> <br /> <p> Last year, Shanxi’s outbound coal transport via road rose 17.84% year on year to 163.25 million tonnes, accounting for 24.6% of the total outbound deliveries, 2.3 percentage points higher than a year ago. Outbound rail coal transport increased 4.68% year on year to 500.07 million tonnes. </p> <p style="text-align:center;"> <img src="/upfiles/news/image/20150205/20150205103832_3094.jpg" alt="" /> </p>