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CSX closes WV office on weak coal volumes

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World Coal,

US rail operator, CSX, is to close its division offices in Huntingdon, West Virginia, on the back of declining coal revenues. Huntingdon division sits at the heart of the Central Appalachian coalfields – the region that has been hit hardest by the downturn in the US coal industry.

The closure of the Huntingdon division offices comes as part of a restructuring of CSX’s operations administration from ten to nine divisions. Its administrative responsibilities will be reassigned to five adjoining divisions based in Atlanta, Baltimore, Florence, Great Lakes and Louisville.

“Over the past four years alone, CSX’s coal revenues have declined US$1.4 billion,” the company said in a press statement. “[This] announcement is part of CSX’s focus on reducing structural costs and aligning resources with demand in its coalfields.”

The 121 management and union employees who currently report to the Huntingdon division offices will remain employed in the area to support the transition of administrative responsibilities to neighbouring offices over the next few months. Following that, the company expects many to be offered the opportunities vacant positions in other areas of the network.

CSX recently announced a fall in quarterly revenue in 4Q15 of 13% on the same period in 2014. Full year revenue was US$11.8 billion – with falling coal volumes partially offset by growth in other markets. The company also said that it expects the difficult business conditions to continue through 2016 with the company forecasting a further fall in earnings.

Overall, freight volumes fell 6.1% on the US rail network on the back of significant declines in coal traffic. Coal production is expected to fall 10% in 2015, according to data from the US Energy Information Administration, as competition from cheap natural gas and regulatory pressures reduced its share in the energy mix.

Meanwhile, coal production in Central Appalachia is forecast to fall hardest to finish the year 40% below its average annual level between 2010 and 2014.

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