Norfolk Southern's (NYSE:NSC) position as the last of the major North American railroads to report third-quarter earnings resonated with a certain appropriateness this time around. While this transport giant may run ahead of the pack when it comes to innovating solutions for a greener tomorrow, today it stands as the railroad most heavily affected by persistent weakness in every relevant sector of the domestic economy.

I'm here to remind you that this is entirely out of their hands.

The hauler bested analyst estimates by a couple of pennies per share, but those analysts had good reason to anticipate a rocky quarter. Throughout the period, and indeed all year long, Norfolk Southern has seen its total freight volumes decline to a greater degree than its competitors. Burlington Northern Santa Fe (NYSE:BNI) -- a core holding of Berkshire Hathaway (NYSE:BRK-A) -- has run into greater relative volume weakness in recent weeks, but over the whole of 2009 to date … Norfolk Southern has been the unlucky laggard.

A surprising 6.2% pricing increase limited Norfolk's revenue decline to 29%, while net earnings took a more severe slide of 42% to land at $303 million. Like its East Coast rival CSX (NYSE:CSX), Norfolk Southern observed a clear near-term boost to automotive volumes as "Cash for Clunkers" drove a 23% sequential improvement from the second quarter. Overall, notwithstanding sequential improvement across all freight categories, Norfolk Southern hauled 20% less freight than it had in the prior-year quarter. Compared with 15% declines recorded by CSX and relative standout Canadian National Railway (NYSE:CNI), this lies at the heart of Norfolk Southern's underperformance relative to its peers.

Norfolk Southern is particularly exposed to the vagaries of the domestic coal market, and the company's 22% decline in coal volumes -- alongside a 35% drop in related revenue -- underscores the persistent weakness that miners like Peabody Energy (NYSE:BTU) and CONSOL Energy (NYSE:CNX) have observed.

As I've stated before, the variable repercussions of this economic downturn are out of the hands of these highly efficient cargo handlers. Readers are advised that these factors are completely independent of the entire group's noteworthy achievements in meeting challenging business conditions with skillfully heightened efficiency.

Norfolk Southern turned in an entirely respectable operating ratio of 72.8% for the quarter, which outshines those of both Burlington Northern and CSX. Going forward, I see the sector steaming towards optimal efficiency as a response to domestic freight demand that has likely to plateau in the near term. Despite their best operational efforts, I find no compelling reason to invest in railroads at this time, but invite you to share your thoughts in the comments section below.

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Fool contributor Christopher Barker has never hopped a freight train, but he thinks it would be a fun place to learn the harmonica. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He also tweets. He owns shares of Peabody Energy. Berkshire Hathaway and Canadian National Railway are Motley Fool Stock Advisor picks. Berkshire Hathaway is a Motley Fool Inside Value selection. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days.

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