JACKSONVILLE, Fla. – Weak demands for commodities are expected to outweigh gains in other parts of CSX's business.
According to CSX Corporation executives, rail volumes are expected to continue falling through the end of the year, with crude oil volumes falling by at least 25 percent quarter-over-quarter. Domestic coal volumes have declined by $1 billion over the past four years as natural gas prices have led power plants to switch fuels. That trend is expected to continue into 2016.
This week, CSX announced it is closing it's locomotive service center, project and car shop, and eliminating switching operations in Erwin, Tennessee, due to reduced coal traffic in the region. This will result in the layoffs of 300 contract and management personnel.
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The railroad has started to run longer trains, attempting to control costs. Lengths were up 10 percent in the third quarter compared to the same time last year, plus reducing the workforce. The average headcount will be down 6 percent in the fourth quarter.
"Overall, we expect fourth-quarter volume declines as we cycle a strong 2014 volume environment, continue to feel the effects of low natural gas and crude oil prices and the impact of strong currency on our export and import-sensitive markets," said CFO Frank Lonegro on the company's earnings call with analysts.
For the third quarter, CSX reported a profit of $507 million, or 52 cents a share, down from $509 million, or 51 cents, a year earlier. Revenue dropped 8.8 percent to $2.94 billion.
At close WEdnesday, CSX stocks were down 1.88 percent -- 52 cents per share, resulting in a value of $27.19 per share according to the Wall Street Journal. After hours showed even more of a drop with CSX stock values stopping at $27.102 per share, down about another 8 cents.