CSX Corp.’s most profitable traffic segment floundered in the fourth quarter and likely will continue to falter through most of 2010. That’s the troubling message on coal that EVP of Sales and Marketing Clarence Gooden delivered the morning of Jan. 20 during the Class I’s fourth-quarter earnings Webcast and teleconference.

While intermodal traffic rose 5 percent and automotive traffic increased 3 percent in 4Q, coal traffic declined 23 percent to 365,000 units. The drop-off followed coal traffic decreases of 18 percent in 3Q, 21 percent in 2Q and 7 percent in 1Q. In addition, 4Q coal revenue tumbled 24 percent to $641 million.

Domestic shipments declined because demand is at low ebb and utility stockpiles are at high levels, said Gooden. Export volumes were weak because of lower global demand. Although natural gas substitution remained high through the quarter, substitutions will ease going forward and the export market will strengthen, said Gooden. But domestic demand and stockpile levels will remain a headwind through much of 2010, he said.

Low natural gas prices, mild weather and the recession contributed to elevated stockpiles as electricity generated by coal in first-half 2009 declined 12 percent against production cuts of 5 percent, Robert W. Baird & Co. Inc. analysts said in a report on CSX’s earnings.

“Current coal production forecasts have absolute production levels for the first quarter at decade lows during upcoming seasonally slower coal production months,” they wrote.

CSX expects line-haul revenue to grow in the first quarter because conditions in nine of 10 markets are favorable, with coal the sole exception, said Gooden.

Also during the earnings presentation, EVP and COO David Brown — who succeeded Tony Ingram last month — reviewed operational performance. On the safety front, CSX’s FRA personal injury rate fell to 0.99 compared with 1.19 in fourth-quarter 2008 and 1.28 in fourth-quarter 2007. The FRA train accident rate dropped to 2.65 from 2.78 in 4Q ’08 and 2.93 in 4Q ’07.

In terms of service, on-time originations decreased to 79 percent from 85 percent in 4Q ’08, but on-time arrivals increased from 77 percent to 79 percent and train velocity increased from 21.2 mph to 22.0 mph. Terminal dwell rose slightly from 23.2 hours in 4Q ’08 to 24.3 hours, but CSX is sacrificing a slight increase in terminal dwell for train sizes and other operating efficiencies, said Brown.

The Class I is well prepared to handle more traffic as volumes build primarily because of available resources, he said. As of Jan. 11, 1,882 train and engine-service employees (or 18 percent of the T&E workforce) remained furloughed; 564 locomotives (or 14 percent of the fleet) remained stored; and 23,602 rail cars (or 30 percent of the fleet) still were stored, said Brown.

It would take about one week to bring stored locomotives and cars back online, and a few weeks to return furloughed workers to their posts. But as volumes increase, resources will return at a less than one-for-one basis, said Brown.

“We’re working aggressively to manage resources as volume returns,” he said. “We’re [also] continuing to drive productivity and cost control.”

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