ATLANTA, April 24, 2026, 11:08 EDT
Norfolk Southern Corporation on Friday flagged that higher fuel prices are set to continue weighing on earnings. First-quarter profit slipped, squeezed by increased costs and leaving investors to scrutinize the railroad’s ability to rein in expenses in what remains a shaky freight environment.
Shares slipped roughly 0.5% to $319.99 by late morning, with Union Pacific sliding as well. Investors shrugged off Norfolk Southern’s adjusted earnings beat, zeroing in instead on fuel costs, sluggish volumes, and the ongoing rail merger review.
Fuel’s timing is critical now—U.S. transport companies are feeling the squeeze on margins. Railroads do tack on fuel surcharges, those extra customer fees linked to prices at the pump, but the relief usually trails behind spikes in diesel costs.
Norfolk Southern posted first-quarter revenue of $3.0 billion, basically unchanged from last year. Income from railway operations slipped to $877 million. The operating ratio—a key cost gauge for railroads—deteriorated to 70.7%. Adjusted earnings landed at $2.65 per share, off 1% year-over-year. CEO Mark George cited “volatile volumes” and a “dramatic rise” in March fuel prices as challenges. PR Newswire
Net income dropped to $547 million, or $2.43 per share, down from $750 million, or $3.31 per share, a year ago, according to the filing. This quarter’s results reflected $52 million in merger costs and another $10 million linked to the East Palestine, Ohio derailment. Last year’s quarter had been boosted by $185 million in net recoveries from the same incident.
Jason Zampi, the company’s Chief Financial Officer, flagged fuel as a “wildcard” during the call with analysts, calling it a significant headwind for the second quarter. According to Zampi, fuel costs came in $31 million above last year’s figure—and more than $40 million higher than what the company budgeted for, with the bulk of the increase hitting late in March. The Motley Fool
The company said overall volume slipped 1%. Intermodal—containers shipped via rail and truck—was under pressure, with units sliding 4%. That included a steep 9% drop in international shipments, reversing last year’s tariff-driven boost. Coal volumes climbed 9% on stronger utility demand, firmer natural gas prices, and efforts to rebuild inventories. Yet, coal revenue still declined as price and mix turned unfriendly.
FactSet’s analyst consensus was $2.51 a share, according to the Associated Press. Norfolk Southern would have cleared that bar if not for the one-time items, but profit took a hit this time—there was no insurance windfall from earlier derailment settlements, and the company faced fresh expenses tied to its planned merger with Union Pacific.
It’s a messy field. Union Pacific — fresh off last year’s $85 billion Norfolk Southern acquisition agreement — flagged on Thursday that rising fuel costs are set to squeeze margins, especially this quarter. Rand Ghayad, chief economist at the Association of American Railroads, told Reuters the fuel impact may dent rail margins short-term, though he called it “manageable and temporary.” Reuters
The bigger overhang for the stock is still the merger. Back in January, the U.S. Surface Transportation Board tossed out the Union Pacific-Norfolk Southern merger filing, labeling it incomplete and citing missing info. The board made it clear, though, that this wasn’t a decision on whether the merger itself was good or bad. Both companies retain the option to submit a new application.
Norfolk Southern has reminded investors that the merger still hinges on STB approval, cautioning that the deal could face delays—or might never reach completion. Management is also watching as some customers look to spread out their shipping options while the transaction drags on. Now, executives are left defending margins in the midst of regulatory scrutiny and shifting shipper loyalties, unsure how the proposed coast-to-coast railroad could shake up the freight landscape.
