Coal competes primarily in the market for low-cost boiler fuels. Coal is also characterized by a relatively low energy content per unit of weight (at best twothirds that of residual oil). Consequently, low-cost and efficient transportation is essential to the competitiveness of coal.

Ocean Transportation

World trade in coal totaled 576 million tons (524 million tonnes) in 1998, of which 523 million tons (476 million tonnes) shipped in oceangoing vessels. Coal shipments use the same dry bulk vessels that transport other bulk commodities, such as iron ore and bauxite, so vessel rates for coal shipments are hostage to wider market forces. However, the cyclic pattern observable in vessel rates disguises the long-term trend in which rates have varied little in nominal terms. For example, spot vessel coal rates in the 1998–1999 time period were about the same as in the mid-1980s, varying between $5 and $10 per...