The sobs of woe that could be heard on the nation's railroads last year have abruptly given way to shrieks of delight.
The hauler generated a 45% surge in net income, earning $257 million on just a 15% revenue boost to $2.2 billion. Total freight traffic rose 9% over the prior-year mark. Promoting the tempting supposition that American consumers may be opening their purse strings, revenues from general merchandise improved 23% over comparable 2009 levels. Revenue from intermodal freight -- another consumer-sensitive category -- rose 12%. Industry data suggest the second quarter may look stronger still, with the operator's overall carloadings up some 24% thus far.
Thanks to a surprisingly strong 57% surge in domestic freight demand for metallurgical coal, Norfolk Southern's coal revenues increased 4%, helping to offset the pronounced lag in steam coal demand from eastern utilities that miners like Arch Coal
A cautionary tune
The easy temptation when positive indicators reemerge from multiple sectors following a calamitous economic collapse is to sing a victory song for sustainable recovery. As we learned from George W. Bush on that fateful flight deck, however, premature declarations of victory can prove more costly than patience and prudence. Union Pacific CEO Jim Young said it best: "I don't think anybody knows how much of this is inventory replacement versus sustainable demand." I voiced similar words of caution after noting surprising strength from steelmakers AK Steel