Norfolk Southern (NSC) JPMorgan Industrials Conference 2026 summary

Network performance and operational resilience

• Severe winter storms in late January and early February caused increased dwell times, reduced train speeds, and impacted service metrics, but the network rebounded quickly by March, demonstrating strong resiliency.

• Incremental costs from storm recovery, including contractor cleanup, added approximately $0.04–$0.05 per share in expenses.

• Utility coal and industrial products volumes remained strong, while intermodal volumes declined about 6% due to weak international imports.

• Delays in coal plant closures and potential recommissioning have supported coal volumes, with regulatory and market factors contributing.

• A new commercial structure with specialized, incentivized sales teams was implemented to drive top-line growth and improve customer engagement.

Financial impacts and market dynamics

• Volatility in oil prices led to a $20–$30 million expense headwind in Q1, with fuel surcharges expected to offset this in Q2 and Q3.

• Higher natural gas prices and ongoing geopolitical conflict could further boost coal demand and pressure trucking, potentially benefiting rail intermodal volumes.

• Improved fuel efficiency, driven by locomotive upgrades from DC to AC technology and operational discipline, resulted in a 5% year-over-year improvement, reaching a 1.03 fuel efficiency ratio.

• Headcount is expected to remain flat to slightly down, with hiring focused on attrition replacement and ongoing productivity gains in both T&E and salaried workforces.

Merger strategy and industry outlook

• Integration planning for the merger is progressing well, with cultural alignment and benchmarking between teams seen as positive.

• The merger aims to overcome structural barriers in U.S. rail, particularly the inefficiencies of east-west interchanges, by enabling single-line service and improving competitiveness with trucking.

• All major U.S. ports are expected to benefit from improved access and optionality, potentially recapturing freight currently routed through Canadian ports.

• Technology adoption, including AI-driven inspection portals and operational optimization, is accelerating, with further advances expected to enhance safety, efficiency, and growth.

• The merger and technology initiatives are positioned as critical to achieving modal equity with trucking, especially as the latter advances with autonomous vehicles.