Wedoany.com Report-Oct. 24, U.S. railroad operator Norfolk Southern (NSC.N) exceeded Wall Street’s expectations for third-quarter profit on Thursday, supported by strong performance in its merchandise segment. This was the company’s first earnings report since announcing its planned merger with Union Pacific (UNP.N), a move intended to establish the nation’s first transcontinental freight rail network.

Norfolk Southern logo is seen in this illustration taken August 5, 2025.

“While not big in the third quarter, we started to see some of the revenue erosion from competitor reactions to the merger announcement,” CEO Mark George said during the earnings call. The merger, which has received attention across the transportation sector, remains subject to approval by the U.S. Surface Transportation Board.

Norfolk Southern reported softer volumes in its intermodal and coal segments, reflecting broader challenges in freight and commodity markets. Company executives noted that coal prices remain under pressure amid uncertainty in export trade, though they expect utility demand to benefit from rising electricity consumption and lower existing coal inventories.

Railroad operators across the United States have seen declining coal shipment volumes as utilities increasingly shift toward lower-cost natural gas. Despite these headwinds, Norfolk Southern’s merchandise segment delivered solid results, helping offset weakness in other categories.

The Atlanta, Georgia-based company posted an adjusted profit of $3.30 per share for the quarter ended September, surpassing analysts’ estimates of $3.19 per share, according to LSEG data. Total operating revenue rose 2% year-over-year to $3.1 billion, roughly in line with market expectations. On an adjusted basis, the company’s operating ratio — a key indicator of cost efficiency — improved slightly to 63.3%, a 10-basis-point gain compared with the same period a year earlier.

Executives also acknowledged that some competitive reactions following the merger announcement had modest short-term effects on revenue. However, the company views the merger with Union Pacific as a strategic opportunity to expand network coverage, enhance operational efficiency, and strengthen long-term freight capabilities.

The broader rail industry has seen mixed results this quarter. Earlier Thursday, Union Pacific reported earnings that exceeded Wall Street estimates, driven by stronger coal volumes. The previous week, peer railroad CSX also beat forecasts, supported by improving intermodal activity and higher pricing in its merchandise division, which helped counter lower coal prices.

While some segments remain under pressure, industry analysts suggest that steady economic activity and energy demand could provide moderate support for rail freight volumes in the coming quarters. Norfolk Southern emphasized its commitment to disciplined cost management and operational improvement as it moves forward with regulatory processes related to the merger.

On Thursday, U.S. equity markets advanced modestly, with the Dow Jones Industrial Average gaining nearly one-third of a percent, reflecting investor optimism following several major corporate earnings announcements. Norfolk Southern’s results highlighted both the near-term challenges and the long-term opportunities emerging within the U.S. freight rail industry.