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Dearth of coal plunges Norfolk Southern Railway revenues 10pc

THE fourth biggest US railway, the Norfolk Southern, posted a 6.9 per cent year on year profit decline to US$405 million in the first quarter of FY2016, drawn on revenues of $2.5 billion, which fell 10 per cent.

Overall throughput fell seven per cent year on year mostly because of weak coal volumes as revenues plunged 25 per cent to $339 million for the quarter, as high stockpiles, mild winter weather, and sustained low natural gas prices caused volumes to drop 24 per cent year-over-year.



Merchandise revenue slipped three per cent to $1.6 billion for the quarter mostly because of three per cent decline in chemical shipments because of low oil prices, reported American Shipper. 



In individual commodity groups, revenues from chemical shipments fell six per cent to $426 million, metals/construction revenues went down three per cent to $419 million, automotive fell two per cent to $248 million and paper/forest declined five per cent to $186 million, while agriculture revenues inched up one per cent to $383 million.



NS intermodal revenues fell 15 per cent to $538 million compared with the second quarter of 2015, as volumes slid five per cent due to the restructuring of the company's Triple Crown Services subsidiary, the railway said.



Operating expenses decreased 11 per cent to $1.7 billion thanks to lower fuel costs and cost cutting initiatives. 



"Our second-quarter results reflect our unwavering focus on cost-control, steadfast commitment to customer service, and significant improvements in network performance," said NS chairman, president and CEO James Squires. 



"We are on track to achieve productivity savings of at least $200 million for 2016, and our record first half operating ratio of 69.4 per cent gives us confidence we'll achieve a full-year operating ratio below 70 per cent.
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