Norfolk Southern Corp.

Overview Key strengths Key risks One of the major U.S. railroads, with an extensive network in the eastern U.S. Price competition from other railroads and trucking companies for the transportation of certain commodities. Diverse traffic base in terms of commodities transported and customers served. Increased debt-funded share repurchases in recent years. Strong operating performance and free cash flow generation despite recent service problems. Reduced operating efficiency in recent months because of the insufficient labor force and supply chain disruptions. Relatively stable credit metrics even with higher share repurchases. Like other large railroads, Norfolk Southern encountered difficulty in bringing back furloughed workers and attracting new talent following the initial economic effects of the pandemic. At the same time, the company has

...We expect service quality will improve in 2023, as Norfolk Southern grows its workforce. Like other large railroads, Norfolk Southern encountered difficulty in bringing back furloughed workers and attracting new talent following the initial economic effects of the pandemic. At the same time, the company has also experienced shortages of equipment and trucking capacity within its intermodal network along with backlogs at terminals, which led to the slower movement of railcars in the network. Combined, these factors limited Norfolk Southern's ability to meet customer demand for certain car types, as it diverted resources to areas of greater demand and some customers, especially within intermodal, chose to shift to other transportation modes in order to ensure timely shipments. Norfolk Southern has implemented plans to address network fluidity and add to its workforce. Following a Surface Transportation Board (STB) hearing in May, Norfolk Southern has met or is close to meeting its six-month...

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