Norfolk Southern’s third-quarter income rose as larger quantity and charges, and gasoline surcharges, produced document income.
“Our third quarter was sturdy with regular execution, making notable enhancements to our community whereas delivering stable outcomes,” Chief Government Mark George mentioned on the railroad’s earnings name. “Now we have an impressive group of thoroughbreds who stay centered on the basics: working a protected, dependable railroad, serving our clients, rising the enterprise, and bettering productiveness throughout the community.”
Working earnings elevated 5% to $1.15 billion, as income grew 14% to $3.52 billion. Gas surcharge income was accountable for 8 of the 14 factors of income development. Earnings per share rose 7%, to $3.37.
The railroad’s (NYSE: NSC) working ratio was 67.4%, up 2.8 factors from a yr in the past largely as a result of larger gasoline prices. Adjusted for the influence of ongoing prices associated to the February 2023 derailment and unsafe supplies launch in East Palestine, Ohio, and bills associated to the proposed merger with Union Pacific (NYSE: UNP), the working ratio was 65.4%.
General quantity was up 3% for the quarter, with merchandise, intermodal, and coal quantity all up 3%.
“Demand for rail service is rising with encouraging developments in areas similar to home intermodal and chemical compounds,” George mentioned. “The present macro setting is tightening the truck market, and that helps rail be extra aggressive. And what you noticed within the quarter is us capturing the elevated buyer demand.”
Chief Industrial Officer Ed Elkins mentioned NS is broadly optimistic for the remainder of 2026. Excessive gasoline costs tied to the Center East battle are boosting energy-related site visitors. However NS is watching whether or not extended excessive fuel costs ultimately soften shopper demand.
A decent truck market and excessive gasoline prices favor highway-to-rail conversions in forest merchandise, shopper merchandise, and home intermodal, Elkins mentioned. Worldwide intermodal stays weighed down by commerce uncertainty. Manufacturing has expanded 9 straight months, industrial improvement is forward of final yr, and car manufacturing seems to be modestly constructive. Coal is anticipated to develop, led by exports and supported by utilities replenishing depleted stockpiles.
NS has rolled out new on-line buyer instruments that velocity responses to price requests and supply higher cargo visibility.
“The result’s extra correct and extra actionable cargo data, enabling clients to plan extra successfully, function extra effectively, and in the end make selections with larger confidence,” Elkins mentioned. “As these capabilities proceed to scale, our purpose is easy: Make Norfolk Southern the simplest railroad to do enterprise with in order that we win extra freight in aggressive markets.”
Key operational metrics have been down in comparison with a yr in the past however improved over the second quarter, when spot crew shortages led to congestion. Terminal dwell improved 3% and prepare velocity was up 5% in comparison with the second quarter. On-time prepare originations improved 18%.
“Our railroaders managed one other demanding quarter, overcoming vital climate and working disruptions whereas remaining centered on serving our clients and working safely,” Chief Working Officer Brian Barr mentioned.
The intermodal service composite was 84%, down from 92% a yr in the past. Merchandise journey plan compliance was 74%, down from 80% a yr in the past. In comparison with the second quarter, merchandise plan compliance rose 6 factors, whereas the intermodal metric declined by a degree.
“We entered the quarter with a transparent plan to recuperate community fluidity by bettering originations, decreasing dwell, rising velocity, and getting the railroad again on schedule,” Barr mentioned. “We delivered sequential enchancment throughout these foundational measures.”
The enhancements within the quarter got here regardless of weather-related disruptions in August.
“On our community’s high-speed hall, the group shortly restored infrastructure, eradicating lots of of downed bushes, repairing a number of washouts, and dealing with widespread energy outages by activating strategic reroutes and repositioning assets,” Barr mentioned. “Whereas the historic wind and rain interrupted a few of our July momentum, it didn’t derail our progress.”
A method NS decreased dwell was by redesigning automotive connections at terminals, which eradicated handlings. The adjustments eliminated 95 crew begins per week and took 200 vehicles per time without work the community, whereas the railroad absorbed 3% carload development, Barr mentioned.
NS additionally consolidated smaller trains between Birmingham, Ala., and Macon, Ga., saving 14 crew begins per week whereas decreasing locomotive wants. Shifting 50 each day swap vehicles from Enola, Pa., to Allentown Yard freed up Enola crews for highway service and moved the switching to a yard with a decrease price per automotive. It additionally opens up yard capability in Enola, Barr mentioned.
The railroad’s private damage and prepare accident charges continued to point out enchancment by means of the primary 9 months of the yr. The prepare accident price was at a document low for the railroad.
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