Norfolk Southern at Global Transportation Conference: Strategic Resilience and Growth

On Tuesday, 20 May 2025, Norfolk Southern (NYSE:NSC) presented at the 18th Annual Global Transportation & Industrials Conference, where CFO Jason Zampi outlined the company’s strategic direction amidst both promising and challenging market conditions. The company showcased its operational resilience and commitment to financial targets, despite macroeconomic uncertainties.

Key Takeaways

• Norfolk Southern is targeting $150 million in productivity savings and a 3% revenue growth for 2024.
• The company aims for a 150 basis points improvement in its operating ratio, with a long-term goal of achieving a sub-60% OR.
• Volume growth is positive, with coal and auto segments exceeding expectations.
• The company is focused on maintaining strong customer service and operational efficiency.
• A potential merger is seen as beneficial, though regulatory challenges are acknowledged.

Financial Results

• Volume Growth: Quarter-to-date volumes in Q2 are up approximately 6%, accelerating from a 1% increase in Q1.
• Revenue Growth: Norfolk Southern reaffirms its 3% revenue growth guidance for 2024, largely driven by volume increases.
• Operating Ratio (OR): The company targets a 150 basis points improvement in OR for 2024, with expectations of sequential improvement from Q1 to Q2.
• Productivity Savings: Aiming for over $150 million in savings, the company has already delivered $90 million in productivity and cost reductions in 2024.
• CapEx: Capital expenditures have been reduced by $200 million, from $2.4 billion to $2.2 billion for 2024.

Operational Updates

• Network Fluidity: Significant improvements in network fluidity have enhanced service and productivity.
• Service Metrics: Weekly service metrics indicate strong operational momentum and resilience in recovering from winter storms.
• Labor Productivity: Advances in train and engine operations have driven labor productivity, with headcount expected to remain stable.
• Fuel Efficiency: Norfolk Southern reported its fourth consecutive quarter of record fuel efficiency.
• Cost Management: Purchase services costs decreased by $20 million year-over-year and $10 million sequentially in Q1.

Future Outlook

• Revenue Growth: The company maintains its 3% revenue growth target for 2024, anticipating market recovery to support this goal.
• Operating Ratio (OR): Aiming for a 150 basis points improvement in 2024, with a long-term target of a sub-60% OR.
• Productivity Savings: Continued focus on achieving $150 million+ in productivity savings and cost reductions.
• Capital Expenditures: CapEx is guided at $2.2 billion for 2024.

Q&A Highlights

• Share Recapture: Improved service product is helping Norfolk Southern recapture share from other transportation modes.
• Pricing and Yields: Achieving inflation-plus pricing in the merchandise segment due to strong service and customer relationships.
• Merger Scenarios: While a TransCon merger could offer synergies and cost benefits, regulatory challenges remain a concern.

For a detailed understanding, readers are encouraged to refer to the full conference call transcript.

Full transcript - 18th Annual Global Transportation & Industrials Conference:

Scott, Interviewer: All right. We’re going get going with our next session with, Norfolk Southern. I’m happy to have Jason Zampi, CFO at the conference this year. Michael, Neil and Luke from the team are also here with us in the first row. Jason, I’m going to let you make some opening comments and then we will get right into it.

So thanks so much for being here.

Jason Zampi, CFO, Norfolk Southern: Yes. Thanks, Scott, and thanks for having us. I think it’s pretty incredible when you think about what we’ve been able to accomplish over the last year. I think John Orr was sitting here with you twelve months ago. And if you think about what he and the team had done from increasing network fluidity, really providing a great service product for our customers and driving productivity really throughout the P and L, it’s really an impressive story.

Sticking on ops for a second, I mean, we’ve got really some really good momentum operationally. You see that in our weekly service metrics. We’ve also demonstrated our ability to run a very resilient railroad. So first quarter continued to test that, had 18 winter storms across the railroad and you saw a lot of the pictures during our first quarter earnings call, up and running in a matter of hours and days versus weeks and probably events like that would have taken us months to recover from. So really strong progress on the resiliency front.

And then like I said, productivity, we’re seeing that labor productivity, fuel efficiency, purchase service costs coming down. So really good progress on that front as well, all while operating safely. And you see our safety metrics continuing to improve. So really good momentum on the operations front. I’d also say we’ve got a really cohesive and energized team that is driving towards our strategic objectives.

So really proud of the group that we’ve got there. And bless you. As we move forward, thinking about where we are going into 2025, we laid out some of our key goals, dollars 150,000,000 of productivity savings and cost reductions, made great progress on that in the first quarter that you saw. We talked about 3% revenue growth and we still a lot of obviously uncertainty in the macro, but still feel good about that. Volumes are still kind of hanging in where we thought they’d be.

And then the math comes to 150 basis points of OR improvement. So feeling good on that side as well and are ready to pivot if necessary, but we kind of know what’s in front of us and feel good about our path.

Scott, Interviewer: Alright. Fantastic. I’ll start, but we have a nice full room. So if people have questions, raise your hand, we’ll get to you. Let’s just start near term volumes tracking up about 6% quarter to date in 2Q, so good start.

How are what’s what commodity segments may be doing better than you would have thought? What, if anything, is worse than you would have thought? And then we’ll go from

Jason Zampi, CFO, Norfolk Southern: there. Yeah. So as you mentioned, volumes have accelerated. We’re up about 1% in the first quarter and then through April and May here, that low single digits, like you talked about mid single digits. I’d say coal and auto are coming in a little stronger than we thought coal from a replenishment of stockpile perspective.

And then auto, we had some production issues that were kind of plants coming back online for. And then I’d say intermodal is pretty much in line with where we thought. International still coming in pretty strong. We haven’t seen really a drop off in that yet. And our domestic intermodal business is staying pretty steady.

Scott, Interviewer: So let’s turn to that intermodal side because we’ve all been talking about this, like, big import cliff Right. Into The US. Feels like we’ve seen it, but it doesn’t seem like it’s showing up in, like the rail intermodal volumes yet. Is this just a timing lag and we’re going to start to see it over the next few weeks? Or is there some reason that, hey, there’s enough inventory still at the ports and a backlog to clear, so the intermodal volumes are going to be a lot steadier than maybe what you would have thought given this import cliff.

Jason Zampi, CFO, Norfolk Southern: Yes. And I think two things there, Scott. One is probably much more pronounced on the West Coast, right? And that’s where we’re kind of hearing that about the air pocket, if you will, and as you mentioned, kind of seeing that those volumes come down now. So we haven’t really experienced that yet on the East Coast for us.

I mentioned our international volumes are still holding strong. If there is an impact, I’d expect it to be much less magnitude than what they’re thinking about on the West Coast. So I think the key with all of this is with all this uncertainty is really sticking with our staying close to our customers, trying to understand where what they’re seeing. But I think the other thing that’s really good is for us, we’ve shown our ability to be agile in this market. You can go back to last year with hurricanes, the port strike, things like the Port Of Baltimore closure, and then this year with winter weather, that’s those kind of shocks and uncertainty in the system, that’s a way that we’ve kind of proven that we can help our customers work through those.

So we feel really good about that aspect.

Scott, Interviewer: So when you think about some volumes up mid single digits, like there’s nothing it doesn’t sound like there’s any reason to think that that in the near term gets a whole lot worse. Does this feel sustainable to you right now?

Jason Zampi, CFO, Norfolk Southern: Yes. I mean, like I said, I think on the intermodal side, we’re going to stay close to it. But everything else is feeling pretty good. I think on the coal side, like I said, we’re seeing some replenishment of stockpiles there. Kind of three things if you think about coming out of the harsh winter second, preparing for summer electricity demand and then third, if you look at forward nat gas natural gas prices, those are elevated.

And so I think utilities are starting to rebuild those stockpiles. All three of those things are kind of helping to drive that. But yes, I think we feel good about our volume outlook and the three percent that we’ve guided to.

Scott, Interviewer: So it’s been a while since we’ve like talked about coal in a positive way. Like you just gave us the three factors. What’s the how long does this period of replenishment last? Is this just a Q2 phenomenon and get to Q3 and we’re back to flat to down coal? Or you think that there’s some duration to the strength in coal?

Jason Zampi, CFO, Norfolk Southern: I think it’s probably a little bit of a mixed bag there, maybe trailing into third quarter a little bit, but we don’t see this being reversal of what we’ve seen kind of over the last couple of years. I think the other piece with coal that we got to keep in mind is I’m focused on the volume side obviously here, but the price side, especially on for export is really depressed. And so that is kind of mitigating these volume gains when you think about all in revenue growth from a coal perspective.

Scott, Interviewer: Just we’ll do that maybe very quickly just because you mentioned it. Any how should we think about the coal RPU Q1 to Q2, just given what you just talked about?

Jason Zampi, CFO, Norfolk Southern: Yes. So sequentially, we think about from first quarter to second quarter continued degradation in export coal yields and then kind of flattening out from there going forward. So that will be a headwind to overall coal RPU for the rest of the year.

Scott, Interviewer: And should we be thinking like down in that low single digit range? Or could it be worse than that?

Jason Zampi, CFO, Norfolk Southern: Yes. I think that’s fair, low single digits.

Scott, Interviewer: Down low single digits. Okay. Great. And then one more just on the volume side, and there’s a lot of other stuff to talk about. We’ve seen over the last six to nine months just like really, really strong growth in West Coast port volumes, right?

Maybe just putting tariff aside, like obviously, there were East Coast labor uncertainty that caused that shift. Do you expect to start seeing you preparing for a shift back to East Coast ports? And is that a good thing, bad thing for you? I’m guessing there’s some puts and takes with that.

Jason Zampi, CFO, Norfolk Southern: Yes, absolutely. So I think to your first point there that it’s another example of how uncertainty in the market kind of disrupts the supply chain. Like you said, there’s a port strike and then maybe a delay on when they were going to fully decide that and customers continue to ship to the West Coast. So we’re starting to see that come back to the East Coast to kind of a more normal equilibrium there. And when we think about where the volume comes from, I’d say this, I think again, I think we’re well positioned to handle it wherever it comes from.

But on the East Coast, we’ve got some really great port partners that have done a lot of great work from a growth and efficiency perspective to handle that volume coming in from the East Coast. And then obviously, the other benefit the East Coast has is just the density, two thirds of the population, half of the manufacturer in The U. S. Being right here on the East Coast. So I think those are all good things.

West Coast, you’d say, all right, well, we’ve got longer lengths of haul, but the trade off there is you maybe lose a little bit of that freight as it kind of moves across the country. So all in, I think we’re ready to handle that volume wherever it comes. We’re not we obviously can’t control that where it comes in, but we’re ready to handle it.

Scott, Interviewer: And then a couple of times you’ve mentioned the 3% revenue growth for the year. It felt like on the Q1 call, message was we’re keeping it, but there’s a lot more sort of uncertainty. Since then, we’ve got at least a ninety day pause. Are you feeling and now we know the volume trends have been pretty good so far in Q2. Are we feeling better about that 3% than we did just a month or so ago?

Jason Zampi, CFO, Norfolk Southern: Yes, I’d say and just to kind of go back there, that 3% revenue growth was really all volume. The yields were kind of flat when you think about the mix of the commodities, and we can talk about that in a second. But so that the volume side was really what’s driving the 3% revenue growth. And I think the volumes that we’re moving right now are encouraging, but relatively in line with kind of where we were expecting it to be maybe a little bit accelerated. So I don’t think we’re feeling worse than where we were, but also don’t feel a lot better just again, because there’s while we have a delay here, there’s not definitive guidance of how this is all going to shake out.

And I think that ultimately customers and shippers are looking for that certainty. So maybe some pull forward here in second quarter, but we’ll have to see how it shakes out the rest of the year.

Scott, Interviewer: Okay. And then maybe similar question on the 150 basis points of margin improvement. Do we need 3% revenue growth to get that 150? Or do you feel like we have line of sight to that even if we don’t get all the way to the 3% revenue growth?

Jason Zampi, CFO, Norfolk Southern: Yes. So we a big part of the 150 basis points of OR improvement is on the back of increased productivity. And we’ve really we delivered two ninety million dollars of productivity and cost takeout in 2024. We’re continuing down that path this year with a guide of $150,000,000 plus and made really strong progress towards that in the first quarter here. So that’s a big component of that.

If that volume, that revenue growth doesn’t come through, we’re scenario planning right now, thinking of other things we can do, but we do need some revenue growth to hit those targets. If you think about when we laid out our longer term targets last spring, it was 150 basis points of OR improvement each year and that was with 3% revenue growth in this overall $550,000,000 of productivity savings. And last year, we flat revenue. So we didn’t get that 3%, but yet we still were able to accomplish that 150 basis points. So we’ve proven we can do it.

I just think on a sustained basis, we do need some revenue growth to help hit those That makes

Scott, Interviewer: sense. And then any way to help us think about sort of near term operating ratio expectations, where we see some degree of sequential improvement Q1 to Q2. Typically, every year is all different, but the range I see, 200 to 400 basis points, pretty wide range. But do you think we should end up in that spectrum?

Jason Zampi, CFO, Norfolk Southern: Yes. We always joke around, we have to use air quotes when we talk about average seasonality. It’s kind of all over the place, but we think about it probably more normal in the like 150 basis to 200 basis points of sequential improvement. You think about where we were in the first quarter at a 67.9%, we feel very confident of beating that normal seasonality as we move from first quarter into second quarter. A couple of things that were kind of one time or non recurring, you think about it, we had $35,000,000 of weather costs, another $35 ish million of incentive comp adjustments.

So those won’t continue on. You pull those out and then you think about kind of maybe that normal seasonality gets you to where we’re kind of thinking here that we need to be in the second quarter and going forward.

Scott, Interviewer: So take that take Q1, take out $70,000,000 of cost, give or take, and then layer in 150,000,000 to 200,000,000

Jason Zampi, CFO, Norfolk Southern: Yes. I think that gets you to right around, like, call it a 64,000,000 which is based on the 67,900,000.0 that we printed in the first quarter, we really have to be at a 64%, sub-sixty 4% for the rest remaining three quarters of the year to hit our 150 basis points of guidance. It’s obviously not going to be even each quarter, second, third and fourth. There’s still obviously some seasonality there, but I think that’s a good way to think about it, Scott.

Scott, Interviewer: Okay. Perfect. And then I know going back a year ago when you guys were given all sorts of long term guidance, it was that the long term guide was a sub-sixty percent OR, right, over the next few years. Is that still the right framework to be thinking about? And what do you think is a realistic timeline to get there?

Jason Zampi, CFO, Norfolk Southern: Yes. I think that’s absolutely our framework. I think the only thing that’s probably changed is maybe the timing of that. When we laid out that framework, we were looking at kind of the three plus year range. And again, really top line thinking about 3% revenue growth each year.

But we also called out really to take that next step from call it a 62% OR down to a 60% OR or sub-sixty percent OR, we kind of needed this market recovery. So another 2% of revenue growth. And we think that’s still going to come. It’s just again, the timing of when that may ultimately come to fruition. So 100% our goal, that’s still what we’re driving towards.

When we laid out those targets, we laid out $550,000,000 in cost savings and we’re that’s not the end goal. We’re going to continue to press on that and that will be a big component of how we hit those targets.

Scott, Interviewer: By the way, if there’s if there’s questions, raise your hand. Do wow. We have a question. I don’t know if we have mics, but if I need to, I’ll repeat it if if need be. So quite question, if I heard it right, is, feels like you’ve had some opportunities to gain some share, other Eastern Rail having some service issues.

As their service gets better, what’s the how much volume you think can go back to the other rail?

Jason Zampi, CFO, Norfolk Southern: Yes. I would say we’re recapturing share from all modes of transportation. I think a couple of years ago, we did not have a strong enough service product for our customers and they needed to make other choices. So what we’re seeing is some of those customers kind of bringing more share of wallet back to us. So things that should already be on rail in the first place and things that make sense to move on NS’ network.

So we feel good about that, the progress we’re making there and it’s really on the back of this great service product. We have to prove that we can consistently provide that service to our customers so that they have that confidence and trust that they can bring it back to us to be a key part of their supply chain.

Scott, Interviewer: I want to talk a bit on the pricing and the yield side a little bit. So if I look at yields, excluding fuel in Q1, they were up a little bit, 05%, but that’s the first increase. We had six quarters of declines. I guess any how should we think about that yield trajectory going forward? If it looks like when you just look at the mix of volume right now with strength and merchandise is really good, it feels like mix is in a much better place than maybe the last bunch of quarters.

So it feels like we could see some strong yield growth this quarter. Are we thinking about that right?

Jason Zampi, CFO, Norfolk Southern: Yes. So let me I’ll hit the last part of your question first from a mix perspective. So I think what you’re seeing is from a high level commodity perspective, you’ve got strong growth in coal, strong growth in merchandise. From a mix perspective, you’d assume that’s positive. But I also think you really need to dig kind of within mix within the mix.

So again, when I talked about export coal pricing and then in the merchandise side, maybe some of the lower rated commodities within merchandise are growing more out sized. So we don’t expect that to be a tailwind here in the first quarter excuse me, as we move into the second quarter. But back to your original question on overall yields, I think you really need to break it down into three pieces. So you talked about ex fuel kind of slightly positive. If you look at the three commodities broken out within merchandise, we’ve had really good pricing progress there.

We’ve got a great service product that’s obviously making those conversations, those pricing conversations easier with our customers. And we’ve had really, like I said, strong price within the merchandise product for quite some time now. But then you look at the other two pieces, intermodal, obviously heavily dependent on the truck market, kind of bouncing along the bottom there from a pricing perspective. And in our current plan, we are not forecasting any uptick in that for the rest of the year, kind of assuming that’s flat. Hopefully, we’re wrong and it comes in higher, but that’s what’s in our base plan.

And then coal again, just really being weighted down by those seaborne coal prices. So that’s what kind of mixes together to get you kind of flat yields. But I think it is really important to look at the pieces because we are making really great progress on that merchandise.

Scott, Interviewer: Just a couple of follow ups. So merchandise was up ex fuel 4% in Q1. I don’t know if there’s mix within that, but so is that a good sort of assumption of what merchandise yield should be right now? Or

Jason Zampi, CFO, Norfolk Southern: I think probably a little bit lower than that as we move forward again, to do that

Scott, Interviewer: Okay. And then intermodal, you said you’re not counting on any intermodal yield uplift. They were up 2% in Q1 ex fuel. Right.

Jason Zampi, CFO, Norfolk Southern: Right. And different components there. When you think about rate, you’ve got your core pricing. Obviously, we’re taking fuel out of here. You’ve got accessorials, things like that.

But overall, we’re kind of assuming flat from here on out.

Scott, Interviewer: Okay. So maybe let’s just we talked about yield. Let’s talk about more like price. Yep. Right?

Because I think for so long, right, the, you know, the given in this industry was just inflation plus price. And it certainly feels like it’s the last few years, it’s been less of a given. Right? Where are we in that sort of a let’s not instead of saying, oh, it’s if you exclude this and this and this, we’re inflation. Like, where when can we say, you know what?

Like, no excuses. We’re inflation plus price.

Jason Zampi, CFO, Norfolk Southern: Right? Well, I was gonna say exactly that. Exclude this and this and that. I I mean, it’s in fairness, I mean, really, when you look at that merchandise business, we are and have been at inflation plus pricing, as you call it, for quite some time now. And that’s really on the back right now of a great service product, something our customers can count on and bring more share to us.

I think to get to a from an overall book of business back to that place, you’re going to need a recovery, higher truck rates and then we’re going to need some help on coal price. Which I think is going to be all in is going to take some time to do. But for right now, again, think about this controlling what we can control, we are getting that inflation plus pricing in our merchandise segment.

Scott, Interviewer: Okay. Maybe now let’s turn to the cost and productivity side. So been very strong labor productivity trends the last bunch of quarters, for like the Q1 volumes up 1%, headcount was down six Now we just got the April headcount data down a little bit more and volumes are up even more. So I think you’re leading the industry right now in terms of labor productivity. How much more is there to go on that front?

Is your service levels with really good labor productivity are also hanging in quite well?

Jason Zampi, CFO, Norfolk Southern: Yes. Yes, that’s right. I appreciate you noticing it because we’re very proud of that labor productivity we’ve got. If you just think about it kind of sequentially from a headcount perspective, we expect to kind of be flat from here on out, kind of which is right around where we ended fourth quarter, but yet we’re bringing on more volume is expectation. We’re not seeing as you pointed out, we’re not seeing any degradation in the service metrics with that additional volume and with this level of labor productivity.

So I think those are key. You can kind of manufacture, if you will, a higher labor productivity, but you might harm service or volume in the process and we’re doing it all together, which is the key to really drive value there. So I think that’s an area that we are continuing to push on, and for sure, that’s a big component of the 150,000,000 of productivity.

Scott, Interviewer: I mean, it feels like for months, if not quarters, you’ve been saying it’s going to be sort of headcount is going to be flat sequentially from here, and it feels like every month it comes out a little bit more, like at some point does that get

Jason Zampi, CFO, Norfolk Southern: Yes. And I think there’s you kind of saw that in first quarter here where we let attrition on the T and E side take hold a little bit. We do have some CTs, some of our conductor trainees starting up again here. That will kind of start to replenish that pipeline and get us probably more flattish with fourth quarter.

Scott, Interviewer: Okay. Now, while labor productivity was really good, the other side of that was comp per employee was up 7% in Q1.

Jason Zampi, CFO, Norfolk Southern: How

Scott, Interviewer: does that trend from here?

Jason Zampi, CFO, Norfolk Southern: Yeah. So I think the best, in my mind, least easiest way to think about comp per employee. We talked about the incentive comp adjustment that we booked in first quarter. We also had some weather related costs that hit comp and benefits. If you take both of those out, comp per employee was like $35,500 per quarter in the first quarter.

That’s about what it was in the fourth quarter and that’s a good run rate for the first half of this year. Then if you think about moving into the second half of the year, you’ve got a 4% contractual wage increase for our union employees going into effect. So, I’d increase it off of that 35.5% going forward. But there will be some partial offset to that wage inflation due to increased productivity.

Scott, Interviewer: Okay. And then what about some of the other cost buckets, right? Just looking at our model, like purchase services is what still feels like the highest versus maybe history at Norfolk, maybe versus some of the other rails. Like, is there is that an opportunity on on the on the cost side? And where where, if anywhere, do you see the most risk of inflation?

Where where is

Jason Zampi, CFO, Norfolk Southern: I think if you think about other areas of productivity, I’ve talked a lot about labor productivity, and we’ve focused really heavily on our T and E productivity. But as we move into 2025, and we’re already starting to see it, it’s kind of pushing that labor productivity into all of the other crafts as well. So whether that be mechanical or engineering workforce, we’re continuing to press on labor productivity there. So that’s kind of double not only the T and E side, but we’re moving to other crafts as well. So we’ll continue on that front.

Fuel efficiency, John, you’ve heard John talk a lot about what he and his team are doing from a fuel efficiency perspective. We just had our fourth quarter in a row of record quarterly fuel efficiency. And it’s not just a fuel efficiency though, it’s also thinking about like how and where we fuel locomotives to get the best price, how we’re distributing fuel, all those kinds of things that will also add to that fuel efficiency. And then Scott, you mentioned Purchase Services. We’ve actually made some pretty good progress there in the first quarter.

Purchase Services were down about $20,000,000 year over year, about down $10,000,000 sequentially. So that is absolutely an area that we’re focused on and an area where there is for sure some more work to do and some more improvement to come. I think it’s when I think about Purchase Services, I kind of think about it in three big buckets. About a third of that, that bucket is really volume variable and that’s for our intermodal and automotive terminals. Those the operation of those terminals are outsourced.

And so you’ve got lift costs, drayage, crane maintenance, things like that, that fall into that, that are volume variable. And as you know, volume intermodal volumes have been going up over the last several years. So that is a piece of that driver. That’s about a third. You got about 25% of that bucket is due to what I would call like operations support services.

So things like taxis and lodging for our crews, rail grinding, those types of things that are obviously necessary for our operation. And then another big chunk of that is technology. All in, those three pieces are about 80% of that Purchase Services bucket. So just to give you a kind of flavor of what’s in there, I think it’s helpful to think about it that way. But you’ve heard us talk last couple of quarters about what we’re doing from a technology standpoint to really rationalize that spend, make sure we’re getting strong returns on those projects, quick delivery and fast benefits.

That’s really Anil, our new CIDO is really helping to drive that. So really good progress there. I think sorry, I talked for a long time. I think the last piece of your question was inflation.

Scott, Interviewer: Yes, just in general, like are there areas that have the biggest risk of

Jason Zampi, CFO, Norfolk Southern: loss I think the where we see where you’ll see inflation probably most pronounced in our P and L is within that comp and bend line. Like I said, we’ve got a 4% wage rate going into effect July 1 for 80 plus percent of our employees. So that will be a big driver. We also see inflation obviously in our materials line item and other lines as well, but comp and ben is the one that sticks out the most.

Scott, Interviewer: Just one or two just like quick ones I want to just touch on just with your CFO hat. CapEx coming down this year. Any incremental opportunities there? And then how much what’s the cash flow benefit if we get 100% bonus depreciation?

Jason Zampi, CFO, Norfolk Southern: Yes. So as you mentioned, we’re, our CapEx in 2024 was $2,400,000,000 We’ve guided now to $2,200,000,000 reduced that about $200,000,000 We’re really able to do that through the work that John and his team have really accomplished. Having a more fluid network, we’re able to set down a lot of locomotives and freight cars, so we don’t have to spend as much on those asset categories. But what it allows us to do is really spend on our steady state areas like infrastructure, rail ties, ballast, things like that and the safety of our network. So that’s going to continue on and we always will invest in those areas.

It’s just we’re a lot we’ve had the opportunity to kind of take it down again from that network fluidity. I wouldn’t think about that number, the $2,200,000,000 coming down going forward. But I would think about I think on a kind of shorthand basis, a lot of people think about CapEx as a percentage of revenue. That percentage will get better from a standpoint of growing our top line, not reducing our CapEx. So we feel like this is kind of a good area to be at.

And then on the bonus depreciation, obviously, that would be a significant help to us. We’re going through the process right now of calculating that from a cash tax perspective, but it’s definitely a benefit.

Scott, Interviewer: And then just last thing, we’ve asked all the rails, no one has announced any plans to do mergers. But no, we’ve asked all the rails just like there just seems to be more chatter for whatever reason. Sure. Your thoughts on does this make sense? Is the timing right?

Or is this just sort of are we wasting our time and breath right now?

Jason Zampi, CFO, Norfolk Southern: Yeah. Mean, I think, obviously, I read the Trains article like I’m sure you did and heard kind of two different perspectives there. One on a TransCon merger, others on just partnerships across the industry with other rails. I think I see a lot of benefit in a TransCon merger. I think there could be a lot of synergies there and cost takeout.

But I also view the regulatory framework as pretty challenging right now. That said, is this administration, is this the time to try to progress that? I don’t know. We’ll see how it shakes out. But I think what we really are focused on at NS is kind of coming back to our core strategy, delivering a great service product for our customers that they can count on and they can trust, which helps us grow, brings more volume onto the network, brings volume that should be on rail, should be on NS back to us, enhancing our productivity and cost profile and doing it all safely.

So those are the things that we’re focused on right now. Again, I know there’s a lot of talk about these these mergers and other other components, but for us, we’re that’s what we’re kind of laser focused on right now.

Scott, Interviewer: Awesome. Thank you, Jason. That was great. Alright. We’re gonna get our next we’re doing a truck brokerage panel in a couple minutes with Landstar, RXO, Echo Global and Arrive Logistics.

So please stick around for that. Was great. Appreciate

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