(Bloomberg News circulated the following story by Angela Greiling Keane and Deirdre Bolton on March 20.)
NEW YORK — Norfolk Southern Corp., which gets more of its revenue from carrying autos than any other large U.S. railroad, said its volume is being hurt by a strike at auto-parts supplier American Axle & Manufacturing Holdings Inc.
The strike is having a “substantial impact” on the carrier’s business with General Motors Corp., Chief Executive Officer Charles “Wick” Moorman said today in a Bloomberg Television interview.
Shipments of parts and finished autos generated 10 percent, or $974 million, of Norfolk Southern’s revenue in 2007. All or part of 29 GM plants in North America have been idled by parts shortages since the strike began Feb. 26. The carrier’s auto- related volume is down 6.7 percent so far this year, the Association of American Railroads said today.
“We’ve seen autos a little softer in the first quarter than we had expected,” Moorman said.
Union Pacific Corp., the largest U.S. railroad, and No. 3 CSX Corp. are feeling the pinch too, spokesmen said.
“The auto industry has been softening over the last several quarters, so the impact of the strike to Union Pacific has been fewer automotive carloadings,” Union Pacific spokesman James Barnes said in an interview.
Omaha, Nebraska-based Union Pacific earned $1.47 billion, or 9.5 percent of its revenue, from auto shipments last year.
The strike has also reduced auto shipping at CSX Corp., spokesman Garrick Francis said. The Jacksonville, Florida-based company generated $839 million, or 9.7 percent of its revenue, from auto freight in 2007.
Norfolk Southern’s Moorman said he hopes to offset some of the volume lost from auto shipping with export coal, a category that is growing as Appalachian coal is shipped overseas.
“Our 2007-over-2006 percentage was up well north of 25 percent,” Moorman said. “We think we’ll see another good-sized gain this year depending on how a lot of the international contracts get hammered out, which happens in April.”
James Squires, the Norfolk, Virginia-based railroad’s chief financial officer, said yesterday that it may be “difficult to achieve” the company’s forecast of 2 percent growth in shipping volume this year because of the cooling U.S. economy.
Norfolk Southern rose 65 cents to $53.07 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have gained 5.2 percent this year.
Burlington Northern Santa Fe Corp., the second-largest U.S. railroad, earned 3.1 percent of its revenue from automotive shipping last year. No information about the strike’s effect was immediately available, spokesman Patrick Hiatte said.