Oct 22, 2026 earnings call — Operational gains, revenue growth and merger update
Norfolk Southern reported 14% overall revenue growth for the third quarter and set an all-time record for revenue less fuel.
Revenue $3.5B (est $3.5B) · EPS $3.62 (est $3.46)
Key quotes
"Our train accident rate is 1.74, a historical best for Norfolk Southern."
"In the quarter, we eliminated 95 crew starts per week and took 200 cars offline per day."
"We finished the quarter with broad-based strength, achieving 3% volume growth in each of our business verticals."
Analyst Q&A 11
pricing and service recovery
Q (Jonathan Chappell · Evercore): He asked which parts of the strong RPU ex fuel were controllable and which were not, and how much price recapture is happening as service improves.
A: Management said they have a long history of pricing power and the recovering service lets them show more value to customers, especially industrial ones. They noted mixed headwinds in merchandise and intermodal mix, and that contract renegotiations are in early stages to adapt to market changes.
"We have had a strong history of price over a long period of time, and having a service product that is recovering has allowed us to exhibit additional value for our customers, and that includes our industrial customers." — Ed Elkins
truck capacity returning
Q (Jason Seidl · TD Cowen): He asked whether the assumption that rail traffic gains could be lost assumes trucking capacity will return, and what else the industry can do besides the proposed Transcon option to retain traffic.
A: Management said trucking capacity will likely return when barriers are low and fuel prices fall, which creates a competitive challenge. They also warned autonomy could make trucking faster and more attractive, and said rail must become more nimble and hire and train more T&E resources to provide buffer for volume swings.
"Look, yes, I think eventually capacity does come back into trucking when the barriers to entry are very low." — Mark George (CEO)
capacity to handle more volume
Q (Chris Wetherbee · Wells Fargo): He asked how much spare capacity the railroad has, why service slowed recently, and how the raised CapEx will be used to add capacity.
A: Management said they have capacity and have taken on volume mostly by filling existing trains rather than many new train starts, though unit-train bulk volumes can pinch capacity. They also said operational changes, train consolidations, fewer car touches, strategic hiring, and 420 stored locomotives give room to grow—already absorbing 3% more shipments this quarter.
"We've already been able to take on 3% more shipments this quarter and absorb that into the existing network." — Brian Barr (COO)
drayage driver challenges
Q (Brian Ossenbeck · JPMorgan): He asked if dray driver availability is constraining intermodal growth and whether investments or tech/contract changes could add flexibility for long-lead hiring needs.
A: Management said they are investing at the terminal level to make drayage more fluid and efficient because driver supply is stressed. They added they are expanding and improving terminals, hitting lift records in several locations, and investing in automation and portals to improve terminal fluidity and reduce manual work.
"Look, we are investing at the terminal level to make sure that our drayage community is as fluid and as efficient as it possibly can be." — Mark George (CEO)
inflation and cost drivers
Q (Bascome Majors · Stephens): He asked about the inflation components behind the cost guide and expectations for 2027 versus 2026, given volume variability.
A: Management said they will not give 2027 guidance now but that inflation has been a challenge, driven by labor contracts and higher materials and vendor costs, which they offset with productivity. They said wage agreements include a 3.75% increase effective July and a 3.5% increase next July, and also called out double-digit health and welfare increases and rising insurance costs.
"So we've got a 3.75% increase that just went into effect in July and another 3.5% next July." — Jason Zampi (CFO)
East vs Transcon conversion
Q (Richa Harnain · Deutsche Bank): She asked why conversion potential looks stronger in the East than Transcon and whether that difference is structural or due to service gaps the merger would fix.
A: Management said there are conversion opportunities at many haul lengths, but Transcon penetration has historically been higher and the East still has much room to convert truckload to rail with the right service. They said the merger would increase penetration in Transcon lanes by creating a better, permanent local service instead of an interline product.
"I think the merger is going to help us do is increase our penetration opportunity in those Transcon lanes because we will have a better service and it will be a permanent change." — Ed Elkins
coal outlook and RPU impact
Q (Eric Morgan · Barclays): He asked how the positive coal outlook squares with low natural gas prices and how much visibility they have on coal volumes and RPU.
A: Management said domestic plants burned more tons than they delivered for much of the year and they expect some restocking, though low natural gas is a strong competitor. They described exports as a favorable pricing environment and called their outlook "level," noting specific recent price comparisons for U.S. low vol and API2 that they view as constructive for Q4.
"On the export side, it is a pretty favorable environment when I think about pricing." — Ed Elkins
intermodal volumes and new services
Q (David Vernon · Bernstein): He asked how to think about intermodal volume excluding the J.B. Hunt repositioning and whether they are planning new services or network expansions while the merger is pending.
A: Management said they are exploring opportunities to deliver new value and highlighted they had their best domestic non-premium third quarter in history for volume. They also said truckload conversions are strong, the network can deliver value, and they have capability, capacity, and are building more capacity to support growth.
"When I think about our capability and what we've done and think about the third quarter, we had the best domestic non-premium third quarter in history for volume." — Ed Elkins
access to Eastern intermodal hubs
Q (Tom Wadewitz · UBS): He asked about capacity at Harrisburg and Allentown and whether giving other railroads access there (trackage rights) would be operationally doable.
A: Management said their Eastern Pennsylvania franchise is attractive and they will defend their network and not give it up. They expressed confidence the STB will not entertain requests for access and said they can't see a scenario where they would cede that franchise.
"We're going to defend our franchise, and we're going to defend our network." — Mark George (CEO)
choosing attractive freight
Q (Ari Rosa · Citi): He asked how discerning they must be about which freight to take, and how they price to ensure attractive returns and stickiness.
A: Management said they have a sales team working daily to find accretive opportunities and are focused on taking business that delivers clear value to customers. They emphasized that service and capacity are key to making business stick and said they are confident the portfolio will become more attractive.
"We have a team of folks that are out on the street every day, including right now, looking for new business." — Mark George (CEO)
industrial project pipeline
Q (James McGarragle · RBC): He asked whether the normalization of industrial customer activity was surprising and requested numbers to help think about carload growth into next year.
A: Management said over 50 industrial projects have moved into design and construction, which they view as the shift from theoretical to executable opportunities, and that the pipeline has normalized to a sustainable run rate after a strong first half. They said the first-half acceleration was the surprise, they are back on budget, and they could not define carloads here.
"We have over 50 industrial projects that have moved into that design and construction phase, and that's the sort of the demarcation line we think between an opportunity that is theoretical versus one that's actually going to be executed." — Mark George (CEO)