(Reuters) – Norfolk Southern Corp reported a lower-than-expected fourth-quarter profit on Wednesday as U.S. railroad operators struggle with labor shortages, service problems and high fuel prices.
The U.S. railroad industry has faced severe criticism from shippers and the U.S. Surface Transportation Board for cutting staffing in pursuit of a leaner operating model, which left operators struggling to fulfill demand.
Profits have also been pressured by high fuel prices, though railroads were able to pass on some of the costs to customers.
Norfolk, which has connections to every major container port on the Atlantic coast as well as the Gulf of Mexico and Great Lakes, said its railway operating expenses rose 19% to $2.1 billion during the quarter.
The company’s operating revenue, however, rose 13% to $3.2 billion.
Railroad operators were also set to award pay hikes and other benefits to workers as part of a tentative deal secured by the Biden administration last year to avert a potential strike.
Norfolk reported a profit of $3.42 per share for the quarter ended December, compared with analysts’ average estimate of $3.44 per share, according to Refinitiv data.
On Tuesday, peer Union Pacific Corp also reported a weaker fourth-quarter profit, hurt by delayed shipments amid labor shortages and a winter storm that crippled freight operations across the country.
(Reporting by Priyamvada C in Bengaluru; Editing by Shilpi Majumdar)
