Norfolk Southern Faces Increased Derailment Costs; Q3 Profit Falls Despite Improved Services

Insurance begins covering derailment costs nearing $1 billion as service performance shows notable improvements; plummeting fuel surcharge revenue and static volume complicate financial struggles.

Norfolk Southern's third-quarter profit has halved to $478 million compared to $958 million in the prior year, due to costs related to a freight train derailment in East Palestine, Ohio in February which has reached $966 million.
The railroad's insurers have begun to cover the growing derailment costs, with the first payment of $25 million received, and expected to cover most of the crash costs which resulted in thousands of evacuations and concerns over potential long-term health effects.
Performance improvements in Norfolk Southern's railroad services have been noted, with the average train speed increased to 20.5 mph and time spent in railyards decreased to 23.2 hours; however, these have not offset the company's financial struggles.
Norfolk Southern's revenue decreased by 11% to $2.97 billion, slightly ahead of Wall Street's prediction of $2.94 billion, largely due to a fall in fuel surcharge revenue by $254 million in the third quarter and flat volume.
In addition to derailment costs, the company's profitability is also affected by inflationary pressures, higher borrowing costs, reduced consumer demand for goods, which has led to lower freight volume despite price increases.