(Reuters circulated the following article on November 14.)
JACKSONVILLE, Florida — Shares in U.S. railroad Norfolk Southern Corp. slid about 7.5 percent on Tuesday after a senior executive said the company’s intermodal and automotive businesses faced a challenging fourth quarter.
Speaking at a transportation conference in New York hosted by Citigroup, Norfolk Southern senior vice president for financial planning James Squires said “short term we have seen some declines in intermodal volumes and I think that reflects underlying weakness in demand.”
Norfolk Southern shares were down $3.93, or 7.5 percent, to $48.75 on the New York Stock Exchange in early afternoon trading. They are still up 9.3 percent for the year but lag the 12.2 percent gain in the Dow Jones Transport Average.
Intermodal services use standardized containers that can be switched between trucks, ships or trains. It is the fastest-growing form of U.S. rail transport, driven by rising imports of goods from Asia, in particular China.
Squires also said fourth-quarter comparisons for its automotive business – which saw a decline in revenue in the third quarter – will be difficult due to auto “plant downtime and additional closures.”
He said that Norfolk Southern has been following the recent announcement by railroads Burlington Northern Santa Fe Corp.
But Squires stressed that Norfolk Southern’s intermodal corridor that it is developing with railroad Kansas City Southern
Analysts said that the new service for BNSF and CSX will benefit both railroads and possibly take some business away from Norfolk Southern.