Heightened intermodal competition took a toll on Norfolk Southern’s volume, revenue, and profits in the fourth quarter.
The 7% drop in intermodal volume drove a 4% decline in overall traffic as NS (NYSE: NSC) lost container business to rival CSX (NASDAQ: CSX), which launched an intermodal alliance with BNSF Railway (NYSE: BRK-B) last summer.
NS Chief Executive Mark George said the fourth quarter played out amid a softer volume environment than had been predicted. “But even so, we controlled the controllables,” he said on the railroad’s earnings call on Thursday morning. “Costs landed exactly in line with the guidance we provided last quarter, reflecting disciplined execution across the company. And while there’s been heavy external attention around the merger, I’m really proud that the team maintained its focus on the business — prioritizing safety, dependable service, and strong cost control.”
George noted that NS was able to move 3% more gross ton-miles in 2025 with 4% fewer employees.
Union Pacific (NYSE: UNP) and NS plan to file a revised merger application with the Surface Transportation Board in March. The tie-up, if approved, would create the first transcontinental railroad.
Quarterly operating income declined 17%, to $937 million, as revenue decreased 2%, to $3 billion. Adjusted for one-time items — including ongoing costs related to the 2023 East Palestine, Ohio, hazardous materials derailment, merger-related expenses, and gains on line sales in 2024 — operating income was down 3%, to $1 billion. Earnings per share declined 11%, to $2.87, but were up 6%, to $3.22, on an adjusted basis.
The railroad’s fourth-quarter operating ratio was 68.5%, up from 62.6% in the fourth quarter of 2024, which included line sales income. The adjusted operating ratio was 65.3%.
Although intermodal traffic was down, NS was able to notch gains in merchandise and coal business. Both were up 1% for the quarter.
Declining export metallurgical coal pricing, however, contributed to an 11% decline in coal revenue. And the increased intermodal competition, meanwhile, represents a 1% revenue hit.
“I’ve told the team we’re gonna fight like hell for quality revenue here. So we want to go get attractive carloads, and we want to try to optimize our revenue line as best as we can,” George said. “We’re not sitting back and taking body blows. So we’re gonna fight like hell.”
Chief Commercial Officer Ed Elkins said the UP-NS interline service linking Kansas City with Louisville, Ky., and the launch of double-stack service to New England over CSX trackage rights were two examples of how NS is fighting back. “There’s more in the pipeline,” he said.
