Norfolk Southern (NSC) 19th Annual Global Transportation & Industrials Conference summary

Merger process and regulatory update

• Application for merger with UP was resubmitted in late April, with a decision on completeness expected by the end of the following week; full acceptance is anticipated, followed by hearings and environmental reviews, with a final decision likely in summer 2027.

• The revised application uses comprehensive traffic data from all railroads, making projections more robust and defensible, and demonstrates increased intermodal conversion potential.

• Public benefits highlighted include shifting 3.8 billion truck miles to rail, reducing highway accidents and fatalities, and lowering transportation costs for consumers.

• Enhanced competition is argued both in terms of rail-to-rail and rail-to-truck, with single line service expected to significantly increase market share and customer benefits.

• Multiple concessions have been offered, including committed gateway pricing and job guarantees, to address stakeholder concerns.

Stakeholder feedback and industry dynamics

• Intermodal partners and beneficial cargo owners are enthusiastic about the merger, seeing value in single line service.

• Merchandise shippers initially express concerns but become supportive after understanding new market access and service improvements.

• Opposition from other railroads is seen as an attempt to delay the process, with little concern about the validity of their arguments.

• Revenue synergy assumptions are based on no follow-on mergers, with confidence in achieving targets due to the large truck market opportunity.

Business performance and market outlook

• Volume momentum is strong, with quarter-to-date volumes up 3%, driven by chemicals, coal, and domestic intermodal outperforming expectations.

• Housing market weakness and fuel price volatility are noted as headwinds, but overall sentiment is cautiously optimistic.

• Domestic intermodal strength persists despite some share loss post-merger announcement, aided by stable rail service and rising truck rates.

• Productivity initiatives have delivered over $500 million in savings over two years, with another $150 million planned, supporting margin improvement.

• Fuel costs are a significant headwind, but efficiency gains and structural productivity are helping offset impacts.