Norfolk Southern's Q4 earnings decline due to intermodal competition, with CSX and BNSF impacting volumes and profits, reports Trains journal.
Norfolk Southern reported weaker fourth-quarter results as intermodal competition cut into volumes and profits, reported Milwaukee's Trains journal. Rival CSX, in alliance with BNSF, drew away container traffic, driving a seven percent decline in intermodal volume and a four percent drop in overall traffic.
Chief Executive Mark George stated that the railroad managed costs in line with guidance despite softer volumes. He noted that NS moved three percent more gross ton-miles in 2025 with four percent fewer employees. Union Pacific and NS plan to file a revised merger application in March that would create the first transcontinental railroad if approved.
Quarterly operating income fell 17 percent to US$937 million, while revenue slipped two percent to $3 billion. Adjusted operating income was down three percent to $1 billion, with earnings per share off 11 percent at $2.87, but up six percent to $3.22 on an adjusted basis. The operating ratio rose to 68.5 percent, or 65.3 percent on an adjusted basis.
Merchandise and coal traffic rose one percent, but coal revenue dropped 11 percent due to weaker export metallurgical coal pricing. George emphasized that NS would fight for quality revenue, while Chief Commercial Officer Ed Elkins cited new interline and double-stack services as examples of competitive responses.
NS posted its best safety record in more than a decade, with reportable injuries down 15 percent, train accidents down 31 percent, and no mainline derailments in the quarter. Chief Operating Officer John Orr mentioned that cost reduction targets have been raised to $650 million over three years, with 2025 savings exceeding goals.
Executives warned that competition from CSX and BNSF will continue to pressure volumes in 2026. NS plans to cut capital spending by 14 percent to US$1.9 billion. For 2025, operating income rose seven percent to $4.4 billion, revenue was flat at $12.2 billion, and earnings per share increased 10 percent to $12.75. The operating ratio improved to 64.2 percent, or 65 percent on an adjusted basis.
