Due to sag in coal traffic, CSX cuts operations in Tennessee

As CSX Transportation works to match its resources to a changing business environment, particuarly as they relate to coal movements, the company on Oct. 15 announced the reduction of train operations at Erwin, Tennessee.

The decision, the result of significantly reduced coal traffic through the region, includes closing a locomotive service center, project shop and car shop, and eliminating switching operations at the Erwin yard. Approximately 300 CSX contract and management employees who work at the facilities and in support roles will be affected.

Operations in Erwin primarily served coal trains moving from the Central Appalachian coal fields (mainly in eastern Kentucky, southern West Virginia and southwest Virginia), and the diminished traffic levels no longer support the activities performed there, CSX noted. The combination of low natural gas prices and regulatory action has significantly decreased CSX’s coal movements over the past four years, with more than $1 billion in coal revenue declines during that time.

CSX said it remains committed to delivering strong service to customers in the region. Remaining coal traffic, as well as merchandise traffic including grain unit trains, will be rerouted efficiently across other parts of the CSX network.

Across Tennessee, CSX operates more than 1,500 miles of track, with facilities that include its division headquarters and a major yard in Nashville.

In its Oct. 13 earnings statement covering the second quarter, CSX said it expects its 2015 coal revenue to decline approximately $450 million primarily due to continued low natural gas prices and coal high inventory levels. In that regard, the company now expects domestic coal volume to decline by more than 10% in 2015, while the full-year outlook for export coal volume remains approximately 30 million tons. “These significant coal headwinds are now also expected to continue in 2016,” CSX added.

The CSX network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation’s population resides. It also links more than 240 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike. The parent company is CSX Corp. (NYSE: CSX).

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.