Wednesday, June 06, 2012

Moorman: Putting coal in perspective

Written by  Luther S. Miller, Senior Consulting Editor

There's no question about the importance of coal to the railroads. It has recently accounted for 44% of U.S. Class I railroad tonnage, 24.1% of carloads, and 24.2% of revenue. A mild winter coupled with abundant and cheap natural gas has led to a sharp decline in coal traffic—it was down 16% in the week ended May 10 and coke was down 9%.

Financial analysts seeking to put this sobering news into the contest of the overall traffic picture received some help Tuesday from Norfolk Southern CEO Wick Moorman, who told CNBC: "Coal is such an important part of our business that it obviously gets a lot of focus, but I do tend to think today people are probably looking a little too hard at coal, and not seeing all of these other good things that are going on."

These "other good things" include traffic product groups that are on the rise. While coal was sinking in the week ended May 19, petroleum products, motor vehicles and equipment, and lumber products up 49%, 23%, and 28%, respectively.

Moorman delivered a similar message on coal to shareholders at their annual meeting May 24, adding: "We are seeing continued growth in several business segments, most noticeably automobiles, metals, and intermodal. We believe that the U.S. economy remains on a sustained albeit slow growth path, and we will continue to position the company for sustained growth through strategic investments and hiring."