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What changed in Norfolk Southern's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Norfolk Southern's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+261 added−228 removedSource: 10-K (2025-02-10) vs 10-K (2024-02-05)

Top changes in Norfolk Southern's 2024 10-K

261 paragraphs added · 228 removed · 180 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAt December 31, 2023, we owned or leased the following revenue generating equipment: Owned Leased Total Capacity of Equipment Locomotives: (Horsepower) Multiple purpose 3,162 30 3,192 12,471,795 Auxiliary units 140 — 140 — Switching 4 — 4 4,400 Total locomotives 3,306 30 3,336 12,476,195 Freight cars: (Tons) Gondola 18,011 3,741 21,752 2,443,624 Hopper 7,672 — 7,672 876,433 Covered hopper 5,384 — 5,384 598,451 Box 2,189 610 2,799 257,694 Flat 1,213 676 1,889 135,106 Other 1,086 — 1,086 46,815 Total freight cars 35,555 5,027 40,582 4,358,123 Intermodal equipment: Chassis 38,397 1,063 39,460 Containers 17,662 — 17,662 Roadrailers 1,110 — 1,110 Total intermodal equipment 57,169 1,063 58,232 The following table indicates the number and year built for locomotives and freight cars owned at December 31, 2023: 2023 2022 2021 2020 2019 2014- 2018 2009- 2013 2008 & Before Total Locomotives: No. of units — — 1 10 36 225 242 2,792 3,306 % of fleet — % — % — % — % 1 % 7 % 7 % 85 % 100 % Freight cars: No. of units 1,043 236 — — 198 4,195 6,401 23,482 35,555 % of fleet 3 % 1 % — % — % — % 12 % 18 % 66 % 100 % K7 The following table shows the average age of our owned locomotive and freight car fleets at December 31, 2023 and information regarding 2023 retirements: Locomotives Freight Cars Average age – in service 28.5 years 25.4 years Retirements 2 units 1,744 units Average age – retired 23.0 years 40.8 years Track Maintenance – Of the 35,000 total miles of track on which we operate, we are responsible for maintaining 28,400 miles, with the remainder being operated under trackage rights from other parties responsible for maintenance.
Biggest changeAt December 31, 2024, we owned or leased the following revenue generating equipment: Owned Leased Total Capacity of Equipment Locomotives: (Horsepower) Multiple purpose 3,101 — 3,101 12,073,500 Auxiliary units 140 — 140 — Switching 4 — 4 4,400 Total locomotives 3,245 — 3,245 12,077,900 Freight cars: (Tons) Gondola 17,007 3,739 20,746 2,346,243 Hopper 6,875 — 6,875 787,764 Covered hopper 5,107 310 5,417 602,841 Box 1,743 513 2,256 211,489 Flat 1,038 670 1,708 122,369 Other 121 — 121 — Total freight cars 31,891 5,232 37,123 4,070,706 Intermodal equipment: Chassis 39,037 — 39,037 Containers 17,443 — 17,443 Total intermodal equipment 56,480 — 56,480 The following table indicates the number and year built for locomotives and freight cars owned at December 31, 2024: 2024 2023 2022 2021 2020 2015- 2019 2010- 2014 2009 & Before Total Locomotives: No. of units — — — 1 10 178 325 2,731 3,245 % of fleet — % — % — % — % — % 6 % 10 % 84 % 100 % Freight cars: No. of units 254 1,059 236 — — 3,505 6,745 20,092 31,891 % of fleet 1 % 3 % 1 % — % — % 11 % 21 % 63 % 100 % K7 The following table shows the average age of our owned locomotive and freight car fleets at December 31, 2024 and information regarding 2024 retirements: Locomotives Freight Cars Average age – in service 29.6 years 24.2 years Retirements 61 units 3,937 units Average age – retired 23.9 years 42.4 years Track Maintenance – Of the 35,000 total miles of track on which we operate, we are responsible for maintaining 28,300 miles, with the remainder being operated under trackage rights from other parties responsible for maintenance.
FREIGHT RATES – Our predominant pricing mechanisms, private contracts and exempt price quotes, are not subject to regulation. In general, market forces are the primary determinant of rail service prices. RAILWAY PROPERTY Our railroad infrastructure makes us capital intensive with net properties of approximately $33 billion on a historical cost basis.
FREIGHT RATES – Our predominant pricing mechanisms, private contracts and exempt price quotes, are not subject to regulation. In general, market forces are the primary determinant of rail service prices. RAILWAY PROPERTY Our railroad infrastructure makes us capital intensive with net properties of approximately $36 billion on a historical cost basis.
See further discussion in Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” and Item 8 “Notes to Consolidated Financial Statements.” We operate freight service over lines with significant ongoing Amtrak and commuter passenger operations and conduct freight operations over trackage owned or leased by Amtrak, New Jersey Transit, Southeastern Pennsylvania Transportation Authority, Metro-North Commuter Railroad Company, and Michigan Department of Transportation.
See further discussion in Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” and Item 8 “Notes to Consolidated Financial Statements.” We operate freight service over lines with significant ongoing Amtrak and commuter passenger operations and conduct freight operations over trackage owned or leased by Amtrak, New Jersey Transit, Southeastern Pennsylvania Transportation Authority, Metro-North Commuter Railroad Company, Virginia Passenger Rail Authority (VPRA), and Michigan Department of Transportation.
Our coal franchise supports the electric generation market, directly serving approximately 30 coal-fired power plants, as well as the export, domestic metallurgical and industrial markets, primarily through direct rail and river, lake, and coastal facilities, including various terminals on the Ohio River, at Lamberts Point in Norfolk, Virginia, at the Port of Baltimore, and on Lake Erie.
Our coal franchise supports the electric generation market, directly serving 18 coal-fired power plants, as well as the export, domestic metallurgical, and industrial markets, primarily through direct rail and river, lake, and coastal facilities, including various terminals on the Ohio River, at Lamberts Point in Norfolk, Virginia, at the Port of Baltimore, and on Lake Erie.
In addition, the following documents are available on our website and in print to any shareholder who requests them: • Norfolk Southern Corporation Bylaws • Charters of the Committees of the Board of Directors • Corporate Governance Guidelines • Categorical Independence Standards • The Thoroughbred Code of Ethics • Code of Ethical Conduct for Senior Financial Officers K3 RAILROAD OPERATIONS – At December 31, 2023, we operated approximately 19,100 route miles in 22 states and the District of Columbia.
In addition, the following documents are available on our website and in print to any shareholder who requests them: • Norfolk Southern Corporation Bylaws • Charters of the Committees of the Board of Directors • Corporate Governance Guidelines • Categorical Independence Standards • The Thoroughbred Code of Ethics • Code of Ethical Conduct for Senior Financial Officers K3 RAILROAD OPERATIONS – At December 31, 2024, we operated approximately 19,200 route miles in 22 states and the District of Columbia.
Government regulations are further discussed within Item 1A “Risk Factors” and the safety and security of our railroads are discussed within the “Security of Operations” section contained herein. COMPETITION – There is continuing strong competition among rail, water, and highway carriers.
Government regulations are further discussed within Item 1A “Risk Factors,” and the safety and security of our railroads are discussed within the “Security of Operations” section contained herein. COMPETITION – There is continuing strong competition among rail, water, and highway carriers.
With the exception of our response to the Eastern Ohio Incident (the “Incident” as defined in Note 17) such compliance has not had a material effect on our financial position, results of operations, liquidity, or competitive position.
With the exception of our response to the Eastern Ohio Incident (the “Incident” as defined in Note 18) such compliance has not had a material effect on our financial position, results of operations, or liquidity.
In 2023, through the Norfolk Southern Operation Awareness and Response Program as well as participation in the Transportation Community Awareness and Emergency Response Program, we provided rail accident response training to more than 5,000 emergency responders, such as local police and fire personnel, utilizing a combination of online training and face-to-face training sessions as well as the Norfolk Southern Safety Train.
In 2024, through the Norfolk Southern Operation Awareness and Response Program as well as participation in the Transportation Community Awareness and Emergency Response Program, we provided rail accident response training to more than 5,500 emergency responders, such as local police and fire personnel, utilizing a combination of online training and face-to-face training sessions as well as the Norfolk Southern Safety Train.
Diversity, Equity, and Inclusion – As a leading transportation service company, we recognize that success in the global marketplace relies on the recruitment and retention of top-tier talent, as well as leveraging the expertise and experiences of individuals from all backgrounds.
Workplace Experience – As a leading transportation service company, we recognize that success in the global marketplace relies on the recruitment and retention of top-tier talent, as well as leveraging the expertise and experiences of individuals from all backgrounds.
Approximately 39% of our lines, excluding rail operated pursuant to trackage rights, carried 20 million or more gross tons per track mile during 2023.
Approximately 40% of our lines, excluding rail operated pursuant to trackage rights, carried 20 million or more gross tons per track mile during 2024.
The following table sets forth certain statistics relating to our operations for the past five years: Years ended December 31, 2023 2022 2021 2020 2019 Revenue ton miles (billions) 176 179 178 164 194 Revenue per thousand revenue ton miles $ 69.05 $ 71.35 $ 62.56 $ 59.67 $ 58.21 Revenue ton miles (thousands) per railroad employee 8,719 9,513 9,694 8,191 7,939 Ratio of railway operating expenses to railway operating revenues (railway operating ratio) 76.5% 62.3% 60.1% 69.3% 64.7% RAILWAY OPERATING REVENUES – Total railway operating revenues were $12.2 billion in 2023.
The following table sets forth certain statistics relating to our operations for the past five years: Years ended December 31, 2024 2023 2022 2021 2020 Revenue ton miles (billions) 178 176 179 178 164 Revenue per thousand revenue ton miles $ 68.09 $ 69.05 $ 71.35 $ 62.56 $ 59.67 Revenue ton miles (thousands) per railroad employee 8,846 8,719 9,513 9,694 8,191 Ratio of railway operating expenses to railway operating revenues (railway operating ratio) 66.4% 76.5% 62.3% 60.1% 69.3% RAILWAY OPERATING REVENUES – Total railway operating revenues were $12.1 billion in 2024.
K9 Efforts have been made over the past several years to increase federal economic regulation of the rail industry, and such efforts are expected to continue in 2024.
K9 Efforts have been made over the past several years to increase federal economic regulation of the rail industry, and such efforts may continue in 2025.
The following table summarizes several measurements regarding our track roadway additions and replacements during the past five years: 2023 2022 2021 2020 2019 Track miles of rail installed 584 541 458 418 449 Miles of track surfaced 4,013 4,155 4,225 4,785 5,012 Crossties installed (millions) 2.1 2.2 2.0 1.8 2.4 Traffic Control – Of the 16,200 route miles we dispatch, 11,300 miles incorporate signalization.
The following table summarizes several measurements regarding our track roadway additions and replacements during the past five years: 2024 2023 2022 2021 2020 Track miles of rail installed 559 584 541 458 418 Miles of track surfaced 3,957 4,013 4,155 4,225 4,785 Crossties installed (millions) 2.1 2.1 2.2 2.0 1.8 Traffic Control – Of the 16,200 route miles we dispatch, 11,300 miles are equipped with signalization.
For further information on the Incident and environmental matters, see Note 17 in Item 8 “Notes to Consolidated Financial Statements.” HUMAN CAPITAL MANAGEMENT Workforce – We employed an average of 20,300 employees during 2023, and 20,700 employees at the end of 2023.
For further information on the Incident and environmental matters, see Note 18 in Item 8 “Notes to Consolidated Financial Statements.” HUMAN CAPITAL MANAGEMENT Workforce – We employed an average of 20,200 employees during 2024 and 19,600 employees at the end of 2024.
INTERMODAL – Our intermodal commodity group consists of shipments moving in domestic and international containers and trailers. These shipments are handled on behalf of intermodal marketing companies, international steamship lines, premium customers and asset-owning companies. In 2023, we handled 3.8 million intermodal units, which accounted for 25% of our total railway operating revenues.
K5 In 2024, we handled 2.3 million merchandise carloads, which accounted for 62% of our total railway operating revenues. INTERMODAL – Our intermodal commodity group consists of shipments moving in domestic and international containers and trailers. These shipments are handled on behalf of intermodal marketing companies, international steamship lines, premium customers, and asset-owning companies.
COAL – Coal revenues accounted for 14% of our total railway operating revenues in 2023. We handled 76 million tons, or 0.7 million carloads, most of which originated on our lines from major eastern coal basins, with the balance from major western coal basins received via the Memphis and Chicago gateways.
We handled 76.7 million tons, or 0.7 million carloads, most of which originated on our lines from major eastern coal basins with the balance from major western coal basins received via the Memphis and Chicago gateways.
See the discussion of merchandise revenues by major commodity group, intermodal revenues, and coal revenues and tonnage in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” MERCHANDISE – Our merchandise commodity group is composed of four groupings: • Agriculture, forest and consumer products includes soybeans, wheat, corn, fertilizer, livestock and poultry feed, food products, food oils, flour, sweeteners, ethanol, lumber and wood products, pulp board and paper products, wood fibers, wood pulp, beverages, and canned goods. • Chemicals includes sulfur and related chemicals, petroleum products (including crude oil), chlorine and bleaching compounds, plastics, rubber, industrial chemicals, chemical wastes, sand, and natural gas liquids.
See the discussion of merchandise revenues by major commodity group, intermodal revenues, and coal revenues and tonnage in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” MERCHANDISE – Our merchandise commodity group is composed of four groupings: • Agriculture, forest and consumer products includes soybeans, wheat, corn, fertilizer, livestock and poultry feed, food products, food oils, flour, sweeteners, ethanol, lumber and wood products, pulp board and paper products, wood fibers, wood pulp, beverages, and canned goods. • Chemicals includes sulfur and related chemicals, petroleum products (including crude oil), chlorine and bleaching compounds, plastics, rubber, industrial chemicals, chemical wastes, sand, and natural gas liquids. • Metals and construction includes steel, aluminum products, machinery, scrap metals, cement, aggregates, minerals, clay, transportation equipment, and items for the U.S. military. • Automotive includes finished motor vehicles and automotive parts.
We also use metrics established by the Federal Railroad Administration (FRA) to measure FRA-reportable accidents per million train miles and injuries per 200,000 employee-hours.
We measure employee safety performance through internal metrics such as accidents, injuries, and serious injuries per 200,000 employee-hours. We also use metrics established by the Federal Railroad K8 Administration (FRA) to measure FRA-reportable accidents per million train miles and injuries per 200,000 employee-hours.
Property Additions – Property additions for the past five years were as follows: 2023 2022 2021 2020 2019 ($ in millions) Road and other property $ 1,547 $ 1,345 $ 1,041 $ 1,046 $ 1,371 Equipment 802 603 429 448 648 Total $ 2,349 $ 1,948 $ 1,470 $ 1,494 $ 2,019 Our capital spending and replacement programs are and have been designed to support our ability to provide safe, efficient, and reliable rail transportation services.
Property Additions – Property additions for the past five years were as follows: 2024 2023 2022 2021 2020 ($ in millions) Road and other property $ 1,711 $ 1,525 $ 1,345 $ 1,041 $ 1,046 Acquisition of assets of CSR 1,643 22 — — — Equipment 670 802 603 429 448 Total $ 4,024 $ 2,349 $ 1,948 $ 1,470 $ 1,494 Our capital spending and replacement programs are and have been designed to support our ability to provide safe, efficient, and reliable rail transportation services.
Corridors with heaviest freight volume: • New York City area to Chicago (via Allentown and Pittsburgh) • Chicago to Macon (via Cincinnati, Chattanooga, and Atlanta) • Central Ohio to Norfolk (via Columbus and Roanoke) • Cleveland to Kansas City • Birmingham to Meridian • Memphis to Chattanooga K4 The miles operated, which include major leased lines between Cincinnati and Chattanooga, and an exclusive operating agreement for trackage rights over property owned by North Carolina Railroad Company, were as follows: Mileage Operated at December 31, 2023 Route Miles Second and Other Main Track Passing Track, Crossovers and Turnouts Way and Yard Switching Total Owned 14,312 2,676 1,953 8,142 27,083 Operated under lease, contract or trackage rights 4,825 1,889 406 841 7,961 Total 19,137 4,565 2,359 8,983 35,044 In 2022, we entered into an asset purchase and sale agreement with the Board of Trustees of the Cincinnati Southern Railway (CSR) to purchase 337 miles of railway line that extends from Cincinnati, Ohio to Chattanooga, Tennessee that we currently operate under a lease.
Corridors with heaviest freight volume: • New York City area to Chicago (via Allentown and Pittsburgh) • Chicago to Macon (via Cincinnati, Chattanooga, and Atlanta) • Central Ohio to Norfolk (via Columbus and Roanoke) • Cleveland to Kansas City • Birmingham to Meridian • Memphis to Chattanooga K4 The miles operated, which include an exclusive operating agreement for trackage rights over property owned by North Carolina Railroad Company, were as follows: Mileage Operated at December 31, 2024 Route Miles Second and Other Main Track Passing Track, Crossovers, and Turnouts Way and Yard Switching Total Owned 14,629 2,826 1,983 8,241 27,679 Operated under lease, contract, or trackage rights 4,525 1,735 373 720 7,353 Total 19,154 4,561 2,356 8,961 35,032 In March 2024, we completed the acquisition of a 337 mile railway line that extends from Cincinnati, Ohio to Chattanooga, Tennessee from the Cincinnati Southern Railway (CSR), which we previously operated under a lease.
The STB has jurisdiction to determine whether we are “revenue adequate” on an annual basis based on the results of the prior year. A railroad is “revenue adequate” on an annual basis under the applicable law when its return on net investment exceeds the rail industry’s composite cost of capital. This determination is made pursuant to a statutory requirement.
A railroad is “revenue adequate” on an annual basis under the applicable law when its return on net investment exceeds the rail industry’s composite cost of capital. This determination is made pursuant to a statutory requirement. The STB also has jurisdiction over the consolidation, merger, or acquisition of control of and by rail common carriers.
Attracting and Retaining Management Employees – Our talent strategy for management employees is essential to attracting strong candidates in a competitive talent environment. We evaluate the effectiveness of that strategy by studying market trends, benchmarking the attractiveness of our employee value proposition, maintaining a competitive compensation package, and analyzing retention data.
We evaluate the effectiveness of that strategy by studying market trends, benchmarking the attractiveness of our employee value proposition, maintaining a competitive compensation package, and analyzing retention data. We also focus on driving employee engagement, which is key to increasing employee productivity, retention, and safety.
Through on-demand digital course offerings, custom-built learning paths, and in-person facilitated content, our programs provide a holistic and inclusive approach to professional development throughout an employee's career.
We provide classroom instruction, hands-on training and simulation-based training designed to improve on-the-job effectiveness and safety outcomes. We also use modern learning and performance technologies to offer robust professional growth opportunities. Through on-demand digital course offerings, custom-built learning paths, and in-person facilitated content, our programs provide a holistic and inclusive approach to professional development throughout an employee's career.
In pursuit of this goal, we are dedicated to establishing a workplace that is diverse, equitable, and inclusive, where a broad spectrum of identities, perspectives, and experiences is not only represented but also valued and empowered to thrive.
In pursuit of this goal, we are dedicated to establishing a workplace where a broad spectrum of identities, perspectives, and experiences is not only represented but also valued and empowered to thrive. GOVERNMENT REGULATION – In addition to environmental, safety, securities, and other regulations generally applicable to all business, our railroads are subject to regulation by the U.S.
We measure and monitor employee productivity based on various factors, including gross ton miles per train and engine employee. Safety – We are dedicated to providing employees with a safe workplace and the knowledge and tools they need to work safely and return home safely every day.
Safety – Safety is a core value at Norfolk Southern. We are dedicated to providing employees with a safe workplace and the knowledge and tools they need to work safely and return home safely every day.
We also focus on driving employee engagement, which is key to increasing employee productivity, retention, and safety. We take a data-centric approach, including the use of periodic surveys among employees, to identify new initiatives that will help boost engagement and drive business results.
We take a data-centric approach, including the use of periodic surveys among employees, to identify new initiatives that will help boost engagement and drive business results. Employee Development and Training – We provide a range of developmental programs, opportunities, skills, and resources for our employees to be successful in their careers.
This includes 8,500 miles governed by centralized traffic control (CTC) and 2,800 miles utilizing automatic block signals. Within the 8,500 miles of CTC, 7,600 miles are controlled by data radio systems originating from 355 base station radio sites.
This includes 8,500 miles governed by Centralized Traffic Control (CTC) and 2,800 miles utilizing Automatic Block Signals. Within the 8,500 CTC miles, 7,600 miles are controlled wirelessly through our data radio network and other infrastructure. ENVIRONMENTAL MATTERS – Compliance with laws and regulations relating to the protection of the environment is one of our principal goals.
GOVERNMENT REGULATION – In addition to environmental, safety, securities, and other regulations generally applicable to all business, our railroads are subject to regulation by the U.S. Surface Transportation Board (STB). The STB has jurisdiction to varying extents over rates, routes, customer access provisions, fuel surcharges, conditions of service, and the extension or abandonment of rail lines.
Surface Transportation Board (STB). The STB has jurisdiction to varying extents over rates, routes, customer access provisions, fuel surcharges, conditions of service, and the extension or abandonment of rail lines. The STB has jurisdiction to determine whether we are “revenue adequate” on an annual basis based on the results of the prior year.
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The transaction is scheduled to close on March 15, 2024.
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In 2024, we handled 4.1 million intermodal units, which accounted for 25% of our total railway operating revenues. COAL – Coal revenues accounted for 13% of our total railway operating revenues in 2024.
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K5 • Metals and construction includes steel, aluminum products, machinery, scrap metals, cement, aggregates, minerals, clay, transportation equipment, and items for the U.S. military. • Automotive includes finished motor vehicles and automotive parts. In 2023, we handled 2.2 million merchandise carloads, which accounted for 61% of our total railway operating revenues.
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Our commitment to an injury-free workplace is outlined in our Risk Reduction Program, which focuses on safety policies and procedures, risk-based hazard management program, safety outreach and communications, technology analysis and implementation, and collaboration with craft employees.
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ENVIRONMENTAL MATTERS – Compliance with federal, state, and local laws and regulations relating to the protection of the environment is one of our principal goals.
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Our safety programs, practices, and messaging further reinforce the importance of working safely including the imperative to speak up with ideas and concerns as well as reinforce the universal authority to stop work if ever unsure or detect a risk that is not adequately safeguarded.
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Our commitment to an injury-free workplace is outlined in our Foundation of Safety policy which focuses on rules compliance, responsibility, relationships, and responsiveness. K8 Our safety programs, practices, and messaging further reinforce the importance of working safely. We measure employee safety performance through internal metrics such as accidents, injuries, and serious injuries per 200,000 employee-hours.
Added
We measure and monitor employee productivity based on various factors, including gross ton miles per train and engine employee. Attracting and Retaining Management Employees – Our talent strategy for management employees is essential to attracting strong candidates in a competitive talent environment.
Removed
Employee Development and Training – We provide a range of developmental programs, opportunities, skills, and resources for our employees to be successful in their careers. We provide classroom instruction, hands-on training and simulation-based training designed to improve on-the-job effectiveness and safety outcomes. We also use modern learning and performance technologies to offer robust professional growth opportunities.
Removed
Our Inclusion Leadership Council, comprised of senior leaders from all departments, our seven employee resource groups, and the Diversity, Equity, and Inclusion strategy team, collaborate closely to implement the plan, articulate measurable goals, and hold ourselves accountable.
Removed
The STB also has jurisdiction over the consolidation, merger, or acquisition of control of and by rail common carriers.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRegardless of the cause, significant disruption or failure of one or more of information or operational technology systems operated by us or under control of third parties, including computer hardware, software, cloud services and communications equipment, can result in us experiencing a service interruption, data breach, or other operational difficulties.
Biggest changeAs a result, our business continuity and disaster recovery plans and activities may not be sufficient for all eventualities, resulting in the potential for a data breach or significant service or operational disruption or failure involving one or more information or operational technology systems operated by us or under control of third parties, including computer hardware, software, cloud services and transportation and communications equipment.
Any future improvements, expenditures, legislation, or regulation changing or materially increasing the efficiency or reducing the cost of one or more alternative modes of transportation in the regions in which we operate (such as granting materially greater latitude for motor carriers with respect to size or weight limitations or adoption and utilization of autonomous commercial vehicles) could have a material adverse effect on our ability to compete with other modes of transportation.
Any future improvements, expenditures, legislation, or regulation changing or materially increasing the efficiency or reducing the cost of one or more alternative modes of transportation in the regions in which we operate (such as granting materially greater latitude for motor carriers with respect to size or weight limitations or adoption and utilization of K14 autonomous commercial vehicles) could have a material adverse effect on our ability to compete with other modes of transportation.
We are incurring significant expenditures as a result of claims and lawsuits arising from the Incident and the related Incident Proceedings, as described in “Incident Risks” above. HUMAN CAPITAL RISKS Failure to attract and retain key executive officers, or skilled professional or technical employees could adversely impact our business and operations.
We are incurring significant expenditures as a result of claims and lawsuits arising from the Incident and the related Incident Proceedings, as described in “Incident Risks” above. HUMAN CAPITAL RISKS Failure to attract, retain, and transition key executive officers, or skilled professional or technical employees could adversely impact our business and operations.
In addition, premiums for some or all of our current insurance programs covering these losses could increase dramatically, or insurance coverage for certain losses could be unavailable to us in the future. We may be negatively affected by supply constraints resulting from disruptions in the fuel markets or the nature of some of our supplier markets.
In addition, premiums for some or all of our current insurance programs covering these losses could increase dramatically, or insurance coverage for certain losses could be unavailable to us in the future. We may be negatively affected by supply constraints resulting from disruptions in our fuel markets or supplier markets.
Additionally, any significant consolidations, mergers or operational changes among other railroads may alter our market access and reach. We may be negatively affected by terrorism or war. Any terrorist attack, or other similar event, any government response thereto, and war or risk of war could cause significant business interruption.
Additionally, any significant consolidations, mergers, or operational changes among other railroads may alter our market access and reach. We may be negatively affected by terrorism or war. Any terrorist attack, or other similar event, any government response thereto, and war or risk of war could cause significant business interruption or other operational challenges.
If we fail to develop, acquire or implement new technology, or otherwise fail to maintain, protect or integrate our information technology systems, we may suffer a competitive disadvantage within the rail industry and with companies providing alternative modes of transportation service.
If we fail to develop, acquire or implement new technology, or otherwise fail to maintain, protect or integrate our information or operational technology systems, we may suffer a competitive disadvantage within the rail industry and with companies providing alternative modes of transportation service.
Deterioration in the supply chain or service provided by connecting carriers, or in our relationship with those connecting carriers, could result in our inability to meet our customers’ demands or require us to use alternate train K14 routes, which could result in significant additional costs and network inefficiencies.
Deterioration in the supply chain or service provided by connecting carriers, or in our relationship with those connecting carriers, could result in our inability to meet our customers’ demands or require us to use alternate train routes, which could result in significant additional costs and network inefficiencies.
K15 We have obtained insurance for potential losses for third-party liability and first-party property damages; however, insurance is available from a limited number of insurers and may not continue to be available or, if available, may not be obtainable on terms acceptable to us.
We have obtained insurance for potential losses for third-party liability and first-party property damages; however, insurance is available from a limited number of insurers and may not continue to be available or, if available, may not be obtainable on terms acceptable to us.
These estimated amounts also do not include any estimate of loss for specific items for which we believe a loss is either not probable or not reasonably estimable for the reasons set forth in Note 17 in Item 8 “Notes to Consolidated Financial Statements.” As a result, our currently accrued amounts of estimated liabilities may be insufficient, and any additional, new or updated accruals could have a material adverse effect on our results of operations or financial position.
These estimated amounts also do not include any estimate of loss for specific items for which we believe a loss is either not probable or not reasonably estimable for the reasons set forth in Note 18 in Item 8 “Notes to Consolidated Financial Statements.” As a result, our currently accrued amounts of estimated liabilities may be insufficient, and any additional, new or updated accruals could have a material adverse effect on our results of operations or financial position.
The risks described below should be read in conjunction with the information regarding the Incident and Incident Proceedings provided in Note 17 in Item 8 “Notes to Consolidated Financial Statements.” INCIDENT RISKS As defined and as further described in Note 17 in Item 8 “Notes to Consolidated Financial Statements”, there was an Incident that occurred in the first quarter that consisted of a February 3, 2023 train derailment in East Palestine, Ohio that included 11 non-Company-owned tank cars containing hazardous materials, fires associated with the derailment that threatened certain of the tank cars, and a controlled vent and burn procedure conducted on February 6, 2023 on five of the derailed tank cars, all of which contained vinyl chloride.
The risks described below should be read in conjunction with the information regarding the Incident and Incident Proceedings provided in Note 18 in Item 8 “Notes to Consolidated Financial Statements.” INCIDENT RISKS As defined and as further described in Note 18 in Item 8 “Notes to Consolidated Financial Statements,” there was an Incident that occurred in the first quarter of 2023 that consisted of a February 3, 2023 train derailment in East Palestine, Ohio that included 11 non-Company-owned tank cars containing hazardous materials, fires associated with the derailment that threatened certain of the tank cars, and a controlled vent and burn procedure conducted on February 6, 2023 on five of the derailed tank cars, all of which contained vinyl chloride.
As a common carrier by rail, we must offer to transport hazardous materials, which exposes us to significant costs and claims. Transportation of certain hazardous materials or third party-owned equipment (typically used to transport such materials) creates risks of significant losses in terms of personal injury and property (including environmental) damage and compromise critical parts of our rail network.
As a common carrier by rail, we must offer to transport hazardous materials, which exposes us to significant costs and claims. Transportation of certain hazardous materials or third party-owned equipment (typically used to transport such materials) creates risks of significant losses in terms of personal injury and property (including environmental) damage and compromises critical parts of our rail network.
We have obtained insurance for potential losses for third-party liability and first-party property damages (see Note 17 in Item 8 “Notes to Consolidated Financial Statements”); however, insurance is available from a limited number of insurers and may not continue to be available or, if available, may not be obtainable on terms acceptable to us.
We have obtained insurance for potential losses for third-party liability and first-party property damages (see Note 18 in Item 8 “Notes to Consolidated Financial Statements”); however, insurance is available from a limited number of insurers and may not continue to be available or, if available, may not be obtainable on terms acceptable to us.
Our operations are subject to extensive federal and state environmental laws and regulations concerning, among other things: emissions to the air; discharges to waterways or groundwater supplies; handling, storage, transportation, and disposal of waste and other materials; and, the cleanup of hazardous material or petroleum releases.
Our operations are subject to extensive federal, state and local environmental laws and regulations concerning, among other things: emissions to the air; discharges to waterways or groundwater supplies; handling, storage, transportation, use, and disposal of waste and other materials; and, the cleanup of hazardous material or petroleum releases.
The information set forth in this Item 1A “Risk Factors” should be read in conjunction with the rest of the information included in this annual report, including Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8 “Financial Statements and Supplementary Data.” We have experienced a number of the risks described below over the past year in connection with the Incident and the Incident Proceedings (defined below).
The information set forth in this Item 1A “Risk Factors” should be read in conjunction with the rest of the information included in this annual report, including Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8 “Financial Statements and Supplementary Data.” We have experienced a number of the risks described below in connection with the Incident and the Incident Proceedings (defined below).
While we have previously experienced technology outages and cybersecurity events that have impacted our systems and service, future events may result in more significant impacts to our operations, reputation or financial results. These potentially impactful future events could include service disruptions, unauthorized access to our systems, viruses, ransomware, and/or compromise, acquisition, or destruction of our data.
In addition, while we have previously experienced technology outages and cybersecurity events that have impacted our systems and service, future events may result in more significant impacts to our operations, reputation or financial results. These potentially impactful future events could include service disruptions, unauthorized access to our systems, viruses, ransomware, and/or the compromise, acquisition, or destruction of our K16 data.
Severe weather conditions and other natural phenomena resulting from changing weather patterns and rising sea levels or other causes, including hurricanes, floods, fires, landslides, extreme temperatures, significant precipitation, and earthquakes, have caused, and may again cause damage to our network, our workforce to be unavailable and us to be unable to use our equipment.
Severe weather conditions and other natural phenomena resulting from changing weather patterns and rising sea levels or other causes, including hurricanes, floods, fires, landslides, extreme temperatures, significant precipitation, and earthquakes, have caused, and may again cause damage to our network, our workforce to be unavailable, and us to be unable to use our equipment, or otherwise cause significant interruptions to our operations.
Department of Justice (DOJ) Complaint, the Ohio Complaint, the Incident Lawsuits, the Shareholder Matters, and the Incident Inquiries and Investigations, (each as defined in Note 17 in Item 8 “Notes to Consolidated Financial Statements”), in addition to other proceedings, actions, or potential changes in response to the Incident, including but not limited to those related to, among other items, train size, train length, train composition, or crew size (collectively, the “Incident Proceedings”).
Department of Justice (DOJ) Complaint, the Ohio Complaint, the Incident Lawsuits, the Shareholder Matters, and the Incident Inquiries and Investigations (each as defined in Note 18 in Item 8 “Notes to Consolidated Financial Statements”) in addition to other proceedings, actions, or potential changes in response to the Incident, including but not limited to those related to, among other items, train size, train length, train composition, crew size, or detection systems (collectively, the “Incident Proceedings”).
As a result of the Incident, we have become subject to numerous legal, regulatory, legislative and other proceedings related thereto, including but not limited to, the National Transportation Safety Board (NTSB) Investigation, the FRA Incident Investigation, the FRA Safety Assessment, the U.S.
As a result of the Incident, we became subject to numerous legal, regulatory, legislative, and other proceedings related thereto, including but not limited to, the National Transportation Safety Board (NTSB) Investigation, the FRA Incident Investigation, the FRA Safety Assessment, the U.S.
K11 In addition, while we have accrued estimates of probable and reasonably estimable liabilities with respect to the Incident and the Incident Proceedings (several of which are in early stages), we cannot predict the final outcome or estimate the reasonably possible range of loss with certainty and such estimates may change over time due to a variety of factors, including but not limited to those set forth in Note 17 in Item 8 “Notes to Consolidated Financial Statements” or other unfavorable or unexpected developments or outcomes which could result in our current estimates being insufficient.
K11 While we have accrued estimates of probable and reasonably estimable liabilities with respect to the Incident and the Incident Proceedings, we cannot predict the final outcome or estimate the reasonably possible range of loss with certainty, and such estimates may change over time due to a variety of factors, including but not limited to those set forth in Note 18 in Item 8 “Notes to Consolidated Financial Statements” or other unfavorable or unexpected developments or outcomes which could result in our current estimates being insufficient.
Difficulties in recruiting and retaining skilled employees, including train and engine workers, key executives, and other skilled professional and technical employees; the unexpected loss of such individuals; and/or our inability to successfully transition key roles could each have a material adverse effect on our business and operations.
Difficulties in recruiting and retaining skilled employees, including train and engine workers, key executives, and other skilled professional and technical employees; the loss of such individuals; and/or our inability to successfully transition key executive, professional, technical, or skilled roles could each have a material adverse effect on our financial position, results of operations, and operations.
We consumed approximately 377 million gallons of diesel fuel in 2023. Fuel availability could be affected by limitation in the fuel supply or by imposition of mandatory allocation or rationing regulations.
We consumed approximately 373 million gallons of diesel fuel in 2024. Fuel availability could be affected by limitation in the fuel supply or by imposition of mandatory allocation or rationing regulations.
Such failures or disruptions can adversely impact our business by, among other things, preventing intercompany communications and disrupting operations that may result in direct or indirect monetary losses, damage to equipment or property, or loss of confidence in corporate competency. These events could have a materially adverse effect on our business, reputation, results of operations and financial condition.
Such failures or disruptions can adversely impact our business by, among other things, preventing intercompany communications and disrupting operations that may result in direct or indirect monetary losses, damage to equipment or property, or loss of confidence in corporate competency.
We may be negatively affected by energy prices. Volatility in energy prices could have a significant effect on a variety of items including, but not limited to: the economy; demand for transportation services; business related to the energy sector, including crude oil, natural gas, and coal; fuel prices; and, fuel surcharges.
Volatility in energy prices could have a significant effect on a variety of items including, but not limited to: the economy; demand for transportation services; business related to the energy sector, including crude oil, natural gas, and coal; fuel prices; and, fuel surcharges, each of which could have a material impact on our business and results of operations.
The magnitude and duration of a pandemic, epidemic or endemic disease, and its impact on our customers and general economic conditions can influence the demand for our services and affect our revenues.
Pandemics, epidemics, or endemic diseases could further negatively impact us, our customers, our supply chain, and our operations. The magnitude and duration of a pandemic, epidemic, or endemic disease, and its impact on our customers and general economic conditions can influence the demand for our services and affect our revenues.
A catastrophic rail accident, whether on our lines or another carrier’s, involving any or all of release of hazardous materials, freight loss, property damage, personal injury, and environmental liability could compromise critical parts of our rail network. Losses associated with such an accident involving us could exceed our insurance coverage, resulting in a material adverse effect on our liquidity.
A catastrophic rail accident, whether on our lines or another carrier’s, involving any or all of release of hazardous materials, freight loss, property damage, personal injury, and environmental liability could compromise critical parts of our rail network.
Our inability to comply with the requirements of existing or updated laws, regulations, or Executive Orders that govern our operations or the rail industry, including but not limited to those pertaining to commercial, operational, tax, safety, security, or cybersecurity matters, could have a material adverse effect on our financial position, results of operations or liquidity.
Our inability to comply with, or operational practices and costs necessary to adhere to, the requirements of existing or updated laws, regulations, or Executive Orders that govern our operations or the rail industry, including but not limited to those pertaining to commercial, operational, tax, safety, security, or cybersecurity matters, as such requirements may be interpreted or enforced from time to time (such as in connection with a pending regulatory or other legal proceedings or lawsuits), could have a material adverse effect on our financial position, results of operations, or liquidity.
We entered into updated labor agreements with these labor unions in December 2022 and future national labor agreements, or renegotiation of labor agreements or provisions of labor agreements, could significantly increase our costs for health care, wages, and other benefits.
Future national labor agreements, or renegotiation of labor agreements or provisions of labor agreements, could significantly increase our costs for health care, wages, and other benefits.
Job-related personal injury and occupational claims are subject to the Federal Employer’s Liability Act (FELA), which is applicable only to railroads. FELA’s fault-based tort system produces results that are unpredictable and inconsistent as compared with a no-fault worker’s compensation system. The variability inherent in this system could result in actual costs being different from the liability recorded.
FELA’s fault-based tort system produces results that are unpredictable and inconsistent as compared with a no-fault worker’s compensation system. The variability inherent in this system could result in actual costs being different from the liability recorded.
Additionally, if our craft employees were to engage in a strike, work stoppage, or other slowdown, including in connection with the renegotiation of any such agreements or any provisions thereof, we could experience a significant disruption in our operations, thereby adversely impacting our results of operations.
In addition, if our craft employees were to engage in or threaten a strike, work stoppage, or other slowdown, including in connection with the renegotiation of any collective bargaining agreements or any provisions thereof, we could experience a significant disruption in our operations, customer base, or belief in our ability to provide consistent service, thereby adversely affecting our operations or ability to provide services.
The state of capital markets could adversely affect our liquidity. We rely on the capital markets to provide some of our capital requirements, including the issuance of debt instruments and the sale of certain receivables.
We have been and may in the future be, materially impacted by adverse developments in these aspects of the economy. The state of capital markets could adversely affect our liquidity. We rely on the capital markets to provide some of our capital requirements, including the issuance of debt instruments and the sale of certain receivables.
K16 MACROECONOMIC AND MARKET RISKS We may be negatively impacted by changes in general economic conditions. Negative changes in domestic and global economic conditions, including reduced import and export volumes, could affect the producers and consumers of the freight we carry. Economic conditions could also result in bankruptcies of one or more large customers.
MACROECONOMIC AND MARKET RISKS We may be negatively impacted by changes in general economic conditions. Because our business is dependent on the rail shipping needs of our customers, negative changes in domestic and global economic conditions, K18 including reduced import and export volumes, could affect the producers and consumers of the freight we carry.
Our success depends on our ability to attract and retain skilled employees, including a sufficient number of craft employees to enable us to efficiently conduct our operations.
Our success depends on our ability to attract and retain skilled employees, including key executive officers to oversee our operational, productivity, marketing, and technological initiatives, as well as a sufficient number of skilled professional and craft employees to enable us to K17 efficiently conduct our operations.
In addition, our failure to comply with or adhere to privacy-related or data protection laws and regulations could result in government investigations and proceedings against us, or litigation, resulting in adverse reputational impacts, penalties, and legal liability. K13 Our business may be seriously harmed if we fail to develop, implement, maintain, upgrade, enhance, protect and integrate our information technology systems.
In addition, our failure to comply with or adhere to privacy-related or data protection laws and regulations could result in government investigations and proceedings against us, or litigation, resulting in adverse reputational impacts, penalties, and legal liability.
Due to the capital-intensive nature, as well as the industry-specific requirements of the rail industry, high barriers of entry exist for potential new suppliers of core railroad items, such as locomotives and rolling stock equipment. Additionally, we compete with other industries for available capacity and raw materials used in the production of locomotives and certain track and rolling stock materials.
Due to the capital-intensive nature, as well as the industry-specific requirements of the rail industry, high barriers of entry exist for potential new suppliers of core railroad items, such as locomotives and rolling stock equipment. As a result, we are dependent on certain key suppliers and manufacturers of locomotive and railroad items.
Any material changes to current litigation trends could also have a material adverse effect on our liquidity to the extent not covered by insurance.
Losses associated with such an accident involving us could exceed our insurance coverage, resulting in a material adverse effect on our financial position or liquidity. Any material changes to current litigation trends could also have a material adverse effect on our financial position or liquidity to the extent not covered by insurance.
Concern over climate change has led to significant federal, state, and international legislative and regulatory efforts to limit greenhouse gas (GHG) emissions. Restrictions, caps, taxes, or other legislative or regulatory controls on GHG emissions, including diesel exhaust, could significantly increase our operating costs and decrease the amount of traffic we handle.
Restrictions, caps, taxes, or other legislative or regulatory controls on GHG emissions, including diesel exhaust, could significantly increase our operating costs and decrease the amount of traffic we handle. In addition, legislation and regulation related to climate change or GHG emissions could negatively affect the markets we serve and our customers.
To conduct business, we extensively rely on information and operational technology systems, and improvements in those technologies, in all aspects of our business. The threat landscape is vast and includes hobbyists, cybercriminals, nation-states and state-sponsored activities. Attacks from these entities include, but is not limited to, denial of service, unauthorized access, theft of money, and data and extortion.
To conduct business, we extensively rely on information and operational technology systems. The threat landscape is vast, with potential attacks from cybercriminals, nation-states, state-sponsored actors and others including, but not limited to, service denials, unauthorized access, compromised equipment or rolling stock, extortion, or theft of data or money.
Although we maintain comprehensive security programs designed to protect our information technology systems, including our risk-based approach to cybersecurity, our reliance on the Framework for Improving Critical Infrastructure Cybersecurity drafted by the U.S Department of Commerce's National Institute of Standards and Technology (NIST CSF) and our layered defense system, we are continually targeted by threat actors attempting to access our networks and we may be unable to detect or prevent a breach of our systems or disruption to our service in the future.
Although we maintain security programs designed to protect our information and operational technology systems, we are continually targeted by threat actors attempting to access our networks and we may be unable to detect or prevent a breach of our systems or disruption to our service in the future.
As noted in “Incident Risks” above, in connection with the Incident, we are experiencing negative impacts related to environmental matters, including extensive cleanup costs and litigation related to alleged environmental impacts of the Incident. OPERATIONAL RISKS A significant cybersecurity incident or other disruption to our technology infrastructure could disrupt our business operations.
As noted in “Incident Risks” above, in connection with the Incident, we are experiencing negative impacts related to environmental matters, including extensive cleanup costs and litigation related to alleged environmental impacts of the Incident. U.S. international trade relationships may adversely impact our customers, our industry, and our business.
LITIGATION RISKS We may be subject to various claims and lawsuits that could result in significant expenditures. The nature of our business exposes us to the potential for various claims and litigation related to labor and employment, personal injury, commercial disputes, freight loss and other property damage, and other matters.
The nature of our business exposes us to the potential for various claims and litigation related to labor and employment, personal injury, commercial disputes, freight loss and other property damage, and other matters. Job-related personal injury and occupational claims are subject to the Federal Employer’s Liability Act (FELA), which is applicable only to railroads.
Moreover, lawsuits and claims involving other unidentified environmental sites and matters are likely to arise from time to time. Our inability to comply with the extensive federal and state environmental laws and regulations to which we are subject could result in significant liabilities or otherwise adversely impact our operations.
Our inability to comply with the extensive federal, state and local environmental laws and regulations to which we are subject could result in significant liabilities, fines, or sanctions, including those related to the investigation or remediation of known and unknown environmental contamination, or otherwise adversely impact our operations.
Removed
System upgrades, redundancy and other continuity measures may be ineffective or inadequate, and our business continuity and disaster recovery planning may not be sufficient for all eventualities.
Added
Moreover, lawsuits and claims involving other unidentified environmental sites and matters are likely to arise from time to time.
Removed
Changes in the competitive landscapes of these limited supplier markets could result in increased prices or significant shortages of materials. Pandemics, epidemics or endemic diseases could further negatively impact us, our customers, our supply chain and our operations.
Added
We transport a significant number of shipments that have either been imported into the U.S. or are destined for export from the U.S.
Removed
In addition, legislation and regulation related to climate change or GHG emissions could negatively affect the markets we serve and our customers.
Added
Trade discussions and arrangements between the U.S. and various of its trading partners are fluid, and existing and future trade agreements are, and are expected to continue to be, subject to a number of uncertainties, including the imposition of new tariffs or adjustments and changes to the products covered by existing tariffs.
Added
Any decision by the U.S. government to adopt actions such as border taxes on imports, an increase in customs duties or tariffs, or the renegotiation of U.S. trade agreements, or any other action that could have a negative impact on international trade, including corresponding actions taken by other countries in response to U.S. governmental actions, could cause a reduction in the volume of shipments by many of our customers.
Added
Any changes in tax and trade policies in the U.S. and corresponding actions by other countries could adversely impact our financial performance. In addition, compliance with any new laws, regulations, or policies with regard to any of the foregoing may increase our operating costs or require significant capital expenditures.
Added
Any failure to comply with applicable laws, regulations or policies in the U.S. or other countries could result in substantial fines or possible revocation of our authority to conduct our operations, which could materially adversely affect us. K13 OPERATIONAL RISKS A significant adverse event on our network may significantly impede our ability to operate and serve our customers.
Added
The nature of our operations inherently comes with the risk that one or more significant adverse events or outages may occur on or impact our network resulting in our inability or restricted ability to provide rail transportation services to our customers.
Added
These events include but are not limited to, a mainline accident, a hazardous material discharge, a climate-related network outage, or a technology-related network outage.
Added
Any one or more of these incidents could expose us to significant operational and managerial challenges, as well as reputational damage, requiring a significant amount of time and focus of our Board and management team, as well as significant lost revenues, expenses, liabilities, fines, and penalties, including amounts that may have a material adverse effect on our financial position, results of operations, or liquidity.
Added
One or more of these events may also result in subsequent legislative, regulatory, operational or other responsive actions taken, changes or protocols adopted (including by us), or requirements imposed that may, either individually or in the aggregate, have a material adverse effect on our financial position, results of operations, liquidity, or operations, or on our customers, the rail industry, or the markets we serve.
Added
If we are unable to successfully execute on our strategic initiatives, our business and future results of operations may suffer. Our growth strategy includes increasing the volume of shipments moving through our railway networks. We are reliant on the success of our strategic plans and initiatives to execute on this growth strategy, as well as to help offset increasing costs.
Added
These strategic plans include marketing, service, growth, and productivity initiatives.
Added
The timely and effective execution of our strategies are dependent upon, among other factors, (i) our ability to maintain satisfactory relations with our customers, employees, and other key stakeholders, (ii) our ability to effectively control costs, (iii) the progress and success of our safety programs and inspection technologies, and (iv) our ability to timely and effectively maintain and upgrade technology systems and other infrastructure for our railway networks.
Added
Our failure to successfully execute on our strategic initiatives may expose us to a number of risks, including, that our projected volume growth may differ from actual results, and prior capital investments based on our projections may contribute to excess capacity that could negatively impact our profitability.
Added
In addition, our industry continues to evolve, including customer demands for faster transit times and increased visibility, and the potential for increased competition (due to growth in the market, competitors with improved financial capacity or technology, or business combinations resulting in one or more competitors providing a wider variety of services and products at competitive prices) which may, either individually or in the aggregate, have a material adverse effect on our business or results of operations.
Added
Disruption to one or more of our key suppliers or manufacturers, including as a result of stopped or restricted production, labor stoppage or restriction, or significant supply shortage or outage could negatively impact our operating efficiency K15 and increase costs.
Added
Additionally, we compete with other industries for available capacity and raw materials used in the production of locomotives and certain track and rolling stock materials. Changes in the competitive landscapes of these limited supplier markets could also result in significantly increased prices or material shortages. We may be negatively affected by energy prices.
Added
Fuel and energy costs have a significant impact on our operations.
Added
In addition, we may also experience a disruption in energy supplies as a result of new or increased regulation, as a result of war or geopolitical conflicts, weather-related events or natural disasters, or other factors beyond our control, which could have a material adverse effect on our business.
Added
Our business is capital intensive, and we must make capital decisions based upon expectations of future usage of our assets. We make significant investments in our railroad infrastructure, including railroad property, track infrastructure, locomotives, freight cars, intermodal equipment, technology, and other assets to support our network, much of which is costly and requires significant capital outlay.
Added
The amount and timing of capital investments depend on various factors, including expectations of future carload traffic. In many cases, we must make advance commitments to purchase or modify equipment prior to such equipment being needed. As a result, we must predict volume levels and other requirements and make commitments based on those projections.
Added
A significant variance in our expectations or projections could result in too much or too little equipment relative to our actual needs and volumes, thereby negatively impacting our operations or financial results. TECHNOLOGY RISKS A significant cybersecurity incident or other disruption to our technology infrastructure resulting from internal and external threats could disrupt our business operations.
Added
Any one or more of these events could have a material adverse effect on our results of operations, financial position, or operations.
Added
Our business may be seriously harmed if we fail to develop, implement, maintain, upgrade, enhance, protect and integrate our information or operational technology systems.
Added
The techniques used by cybersecurity threat actors to obtain unauthorized access, disable or degrade service or sabotage systems change frequently, as data breaches and other cybersecurity events have become increasingly commonplace. Consequently, these techniques may be difficult to detect and cybersecurity events are therefore increasingly difficult to prevent.
Added
The rapid evolution and increased adoption of emerging technologies, such as artificial intelligence and machine learning, may make it more difficult to anticipate cybersecurity threats and implement adequate protective countermeasures.
Added
If we fail to adequately develop or maintain our information or operational technology systems or cybersecurity infrastructure, we may become increasingly vulnerable to cybersecurity events, or other breaches or disruptions to our information or operational technology systems. LITIGATION RISKS We may be subject to various claims and lawsuits that could result in significant expenditures.
Added
The loss of one or more key employees could also result in the depletion of our institutional knowledge base and may result in our inability or increased difficulty in successfully transitioning key roles, which could materially adversely impact our business.
Added
In the third and fourth quarters of 2024, the Company reached tentative collective bargaining agreements with ten of these labor unions, a majority of which were subsequently ratified by union membership and became effective January 1, 2025.
Added
Our inability to quickly and effectively restore operations following adverse weather and disasters could materially impact our business and results of operations. To the extent such weather events or natural disasters become more frequent or severe, disruptions to our business and those of our customers and costs to repair damaged property and equipment or maintain or resume operations could increase.
Added
Furthermore, climate change may contribute to an increase in the incidence and severity of natural disasters and adverse weather conditions and reduce the availability or increase the cost of insurance for such events. Concern over climate change has led to significant federal, state, and international legislative and regulatory efforts to limit greenhouse gas (GHG) emissions.
Added
Recessionary economic cycles and downturns in customers’ business cycles, especially in market segments and industries where we have a significant concentration of customers, may substantially reduce our volumes, and lead to excess capacity in the industry, resulting in pressure on rates we are able to obtain for our services.
Added
Economic conditions could also result in bankruptcies of one or more of our customers. Changes in general economic conditions are beyond our control, and it may be difficult for us to adjust our business model. We are impacted by industrial production, inflation, unemployment, and consumer spending.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

18 edited+2 added−2 removed13 unchanged
Biggest changeAs a result, our ERM leadership team works with the Chief Information Officer (CIO) and Chief Information Security Officer (CISO) to define the top areas of risk in both the technology and cybersecurity areas, with such risks incorporated into our ERM framework and mapped to the NIST CSF.
Biggest changeOur ERM leadership team works with the Chief Information and Digital Officer (CIDO), the Senior Director of Information Security (SDIS) and other technology leaders to identify, define, and assess top areas of technology and cybersecurity risks, which are included in our ERM risk framework and mapped to the NIST CSF.
Such a direct or indirect cybersecurity incident could interrupt our service, cause safety failures or operational difficulties, decrease revenues, increase operating costs, impact our efficiency, damage our corporate reputation, and/or expose us to litigation, government action, increased regulation, penalties, fines or judgments, any or all K18 which may ultimately have a materially adverse effect on our results of operations, financial condition, reputation, and business (including our strategy of operating a resilient freight railroad).
Such a direct or indirect cybersecurity incident could interrupt our service, cause safety failures or operational difficulties, decrease revenues, increase operating costs, impact our efficiency, damage our corporate reputation, and/or expose us to litigation, government action, increased regulation, penalties, fines or judgments, any or all which may ultimately have a materially adverse effect on our results of operations, financial condition, reputation, and business (including our strategy of operating a resilient freight railroad).
In an effort to deter and detect cyber threats, we also periodically provide all employees with a data protection and cybersecurity awareness training program, which covers timely and relevant topics, including phishing, password protection, confidential data protection, asset use and mobile security, and further educates employees on the importance of and process for reporting all potential incidents immediately.
K21 In an effort to deter and detect cyber threats, we also periodically provide all employees with a data protection and cybersecurity awareness training program, which covers timely and relevant topics, including phishing, password protection, confidential data protection, asset use, and mobile security and further educates employees on the importance of and process for reporting all potential incidents immediately.
We further monitor, test, assess, and update these processes, including working with government agencies and peers to implement practices to guard against an evolving threat environment and to ensure we remain compliant with relevant regulatory requirements.
K19 We further monitor, test, assess, and update these processes, including working with government agencies and peers to implement practices to guard against an evolving threat environment and to ensure we remain compliant with relevant regulatory requirements.
While we have previously experienced technology outages and cybersecurity events that have impacted our systems and service, future events may result in more significant impacts to our operations, reputation or financial results.
K20 While we have previously experienced technology outages and cybersecurity events that have impacted our systems and service, future events may result in more significant impacts to our operations, reputation, or financial results.
We prioritize defensive mechanisms, including administrative, K17 procedural, and technical controls, according to their relative cost and reduction in risk based on the NIST CSF.
We prioritize defensive mechanisms, including administrative, procedural, and technical controls, according to their relative cost and reduction in risk based on the NIST CSF.
The Board receives a periodic update from the Chair of the F&RM Committee regarding the matters addressed by the F&RM Committee, as well as an annual report from the CISO highlighting the emerging threat landscape, our progress executing on our defensive cybersecurity strategy, and a review of our cybersecurity incident investigation and response processes.
The Board receives a periodic update from the Chair of the F&RM Committee regarding the matters addressed by the F&RM Committee, as well as an annual report from the CIDO highlighting the emerging threat landscape, our progress executing on our defensive cybersecurity strategy, and a review of our cybersecurity incident investigation and response processes.
We also use technology-based tools to mitigate cybersecurity risks and to bolster employee-based cybersecurity programs. Item 3. Legal Proceedings For information on our legal proceedings, see Note 17 “Commitments and Contingencies” in Item 8 “Notes to Consolidated Financial Statements.”
We also use technology-based tools to mitigate cybersecurity risks and to bolster employee-based cybersecurity programs. Item 3. Legal Proceedings For information on our legal proceedings, see Note 18 “Commitments and Contingencies” in Item 8 “Notes to Consolidated Financial Statements.”
As noted above, our technology risk working group, comprised of leaders across the information technology, information security and law departments, including our CIO, CISO and Data Privacy Officer (DPO), among others, further monitor developments in the threat landscape so that key cybersecurity threats impacting the Company continue to be identified and prioritized.
As noted above, our technology risk working group, comprised of leaders across the information technology, information security, and law departments, including our CIDO, SDIS, and Data Privacy Officer (DPO), among others, further monitor developments in the threat landscape so that key cybersecurity threats impacting the Company continue to be identified and prioritized.
Management and Board Reporting Cybersecurity incidents are reported directly to the CISO in accordance with the applicable incident response plan.
Management and Board Reporting Cybersecurity incidents are reported directly to the SDIS in accordance with the applicable incident response plan.
K19 We also have a cybersecurity incident response plan including specific responsive protocols administered by a predesignated incident response team, led by our CISO and DPO and comprised of other members of management. This incident response team also conducts periodic table-top exercises with management to ensure adherence to our cybersecurity incident response plan.
We also have a cybersecurity incident response plan including specific responsive protocols administered by a predesignated incident response team, led by the SDIS and DPO and comprised of other members of management. This incident response team also conducts periodic table-top exercises with management to ensure adherence to our cybersecurity incident response plan.
The CISO, together with the DPO, determine incident severity and response, and in turn report material or potentially material incidents to our internal 8-K subcommittee (comprised of senior leaders from the law, accounting, finance, investor relations, and communications departments), our CEO, and our Executive Vice President Corporate Affairs and Chief Legal Officer, who in turn notify the Chairs of the Board and the F&RM Committee.
The SDIS, together with the DPO, determine incident severity and response, and in turn report material or potentially material incidents to our internal 8-K subcommittee (comprised of senior leaders from the law, accounting, finance, investor relations, and communications departments), our CEO, and our Chief Legal Officer, who in turn notify the Chairs of the Board and the F&RM Committee.
Risk Factors – Operational Risks – “A significant cybersecurity incident or other disruption to our technology infrastructure could disrupt our business operations” for our disclosures regarding the most pertinent risks we may experience from cybersecurity threats.
Risk Factors – Technology Risks – “A significant cybersecurity incident or other disruption to our technology infrastructure resulting from internal and external threats could disrupt our business operations” for our disclosures regarding the most pertinent risks we may experience from cybersecurity threats.
In addition, all providers within these service categories must sign our data security attachment that articulates the specific security standards, cybersecurity insurance, and mandatory incident reporting protocols applicable to the underlying provision of services. Risks Please see Item 1A.
In addition, all providers within these service categories must execute a data security addendum that articulates specific security standards, cybersecurity insurance, and mandatory incident reporting protocols applicable to the underlying provision of services. Risks Please see Item 1A.
Management's Role The CISO, reporting to the CIO, is directly responsible for the assessment, oversight, and management of our enterprise-wide cybersecurity strategy and governance.
Management's Role Our SDIS, reporting to the CIDO, is directly responsible for the assessment, oversight, and management of our enterprise-wide cybersecurity strategy and governance.
Item 1C. Cybersecurity CYBERSECURITY RISK MANAGEMENT AND STRATEGY Process We use a multi-layered defensive cybersecurity strategy based on the cyber security framework drafted by the NIST. The NIST CSF is a voluntary framework of best practices to identify, protect, detect, respond to, and recover from cybersecurity matters.
Item 1C. Cybersecurity CYBERSECURITY RISK MANAGEMENT AND STRATEGY Process We use a multi-layered defensive cybersecurity strategy based on the cyber security framework drafted by the U.S. Department of Commerce's National Institute of Standards and Technology (NIST). The NIST Cybersecurity Framework (NIST CSF) is a voluntary framework of best practices to identify, protect, detect, respond to, and recover from cybersecurity matters.
CYBERSECURITY GOVERNANCE Board Oversight The Norfolk Southern Board, through the F&RM Committee, has direct oversight of cybersecurity risks. The F&RM Committee receives periodic reports from the CIO and CISO regarding the primary technology risks impacting the company, including risks impacting our information and operational systems, service resiliency, cybersecurity risks, and the related threat environment.
CYBERSECURITY GOVERNANCE Board Oversight The Norfolk Southern Board, both directly itself and indirectly through the F&RM Committee, has oversight of cybersecurity risks. The F&RM Committee receives periodic reports from the CIDO regarding the primary technology risks impacting the company, including risks impacting our information and operational systems, service resiliency, cybersecurity risks, and the related threat environment.
Integration into our Risk Management Framework Our processes to assess, identify, and manage cybersecurity risks are expressly incorporated into our enterprise risk management (ERM) framework, which includes technology as one of the five primary risk categories addressed by the ERM framework, with cybersecurity risks being one of the three subcategories within the technology risk category.
Integration into our Risk Management Framework Our processes to assess, identify, and manage cybersecurity risks are expressly incorporated into our enterprise risk management (ERM) framework. Technology is one of the five primary risk categories addressed by the ERM framework, and cybersecurity is identified as a subcategory of the technology risk.
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Our internal ERM leadership also meets on a quarterly basis with our technology risk working group, comprised of leaders across the information technology, information security and law departments, to monitor developments in the threat landscape so that key cybersecurity threats impacting the Company continue to be identified and prioritized.
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Our internal ERM leadership meets regularly with our technology leadership team to review developments in our technology risk profile and works with the cybersecurity team to monitor key risk indicators linked to our cybersecurity risks. Any changes to the threat landscape are discussed and considered as adjustments to our risk profile.
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Our CISO has significant relevant experience in the area, including graduate and postgraduate engineering technology degrees, along with 20 years of information security experience in critical infrastructure, as well as seven years with Norfolk Southern where he guided the Company through the implementation of our multi-layered defensive cybersecurity strategy that aligns with the NIST CSF.
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Such individual has significant relevant experience in the area, including over 27 years of technology experience in various industries with 17 years focused on information security, as well as significant experience working closely with government agencies including the Federal Bureau of Investigation, the Transportation Security Agency, and the Department of Homeland Security.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings K 20 Item 4. Mine Safety Disclosures K 20 Information About Our Executive Officers K 21 Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities K 22
Biggest changeItem 3. Legal Proceedings K 22 Item 4. Mine Safety Disclosures K 22 Information About Our Executive Officers K 23 Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities K 24

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeElkins, Jr., 58, Executive Vice President and Chief Marketing Officer Present position since December 1, 2021. Served as Vice President Industrial Products from April 1, 2018 to December 1, 2021. Mark R. George, 56, Executive Vice President and Chief Financial Officer Present position since November 1, 2019.
Biggest changeServed as Vice President Industrial Products from April 1, 2018 to December 1, 2021. Jason A. Zampi, 50, Executive Vice President and Chief Financial Officer Present position since September 24, 2024. Served as Senior Vice President Finance and Treasurer from August 20, 2024 to September 24, 2024.
Executive officers also may be elected and designated throughout the year as the Board considers appropriate. There are no family relationships among our officers, nor any arrangement or understanding between any officer and any other person pursuant to which the officer was selected. The following table sets forth certain information, at February 1, 2024, relating to our officers.
Executive officers also may be elected and designated throughout the year as the Board considers appropriate. There are no family relationships among our officers, nor any arrangement or understanding between any officer and any other person pursuant to which the officer was selected. The following table sets forth certain information, at February 1, 2025, relating to our officers.
Item 4. Mine Safety Disclosures Not applicable. K20 Information About Our Executive Officers Our executive officers generally are elected and designated annually by the Board at its first meeting held after the annual meeting of stockholders, and they hold office until their successors are elected.
Item 4. Mine Safety Disclosures Not applicable. K22 Information About Our Executive Officers Our executive officers generally are elected and designated annually by the Board at its first meeting held after the annual meeting of stockholders, and they hold office until their successors are elected.
Name, Age, Present Position Business Experience During Past Five Years Alan H. Shaw, 56, President and Chief Executive Officer Present position since May 1, 2022. Served as President from December 1, 2021 to May 1, 2022. Served as Executive Vice President and Chief Marketing Officer from May 16, 2015 to December 1, 2021. Ann A.
Name, Age, Present Position Business Experience During Past Five Years Mark R. George, 57, President and Chief Executive Officer Present position since September 11, 2024. Served as Executive Vice President and Chief Financial Officer from November 1, 2019 to September 11, 2024. Ann A. Adams, 54, Chief Human Resources Officer Present position since December 9, 2024.
Prior to joining Norfolk Southern, served as Vice President and Corporate Counsel in the Financial Management Law Group at Prudential Financial from March 3, 2014 to August 1, 2020. Claiborne L. Moore, 44, Vice President and Controller Present position since March 1, 2022. Served as Assistant Vice President Corporate Accounting from March 15, 2019 to March 1, 2022.
Served as Vice President of Financial Planning and Analysis from June 1, 2020 to September 24, 2024. Served as Vice President and Controller from December 16, 2018 to June 1, 2020. Claiborne L. Moore, 45, Vice President and Controller Present position since March 1, 2022. Served as Assistant Vice President Corporate Accounting from March 15, 2019 to March 1, 2022.
Adams, 53, Executive Vice President and Chief Transformation Officer Present position since April 1, 2019. Served as Vice President Human Resources from April 1, 2016 to April 1, 2019. Paul B. Duncan, 44, Executive Vice President and Chief Operating Officer Present position since January 1, 2023.
Served as Special Advisor to CEO from March 17, 2024 to December 9, 2024, and as Executive Vice President & Chief Transformation Officer from April 1, 2019 to March 16, 2024. Anil Bhatt, 50, Executive Vice President and Chief Information and Digital Officer Present position since August 19, 2024.
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Served as Senior Vice President Transportation and Network Operations from September 1, 2022 to January 1, 2023. Served as Vice President Network Planning and Operations from March 1, 2022 to September 1, 2022. Prior to joining Norfolk Southern, served as Vice President of Service Design and Performance for BNSF Railway from October 1, 2018 to March 1, 2022. Claude E.
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Prior to joining Norfolk Southern, served in various positions at Elevance Health. Served as Global Chief Information Officer from December 2020 through August 2024 and Senior Vice President & Chief Technology Officer from August 2018 to December 2020. John F. Orr, 61, Executive Vice President and Chief Operating Officer Present position since March 20, 2024.
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Prior to joining Norfolk Southern, served as Vice President, Finance and Chief Financial Officer at segments of United Technologies Corporation. The positions were Vice President Finance, Strategy, IT and Chief Financial Officer at Otis Elevator Company from October 2015 to May 2019, and Vice President Finance and Chief Financial Officer at Carrier Corporation from June 2019 until joining Norfolk Southern.
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Prior to joining Norfolk Southern, served as Executive Vice President, Chief Transformation Officer for Canadian Pacific Kansas City (CPKC) from April 2023 to March 2024 and Executive Vice President of Operations at Kansas City Southern from April 2021 to April 2023.
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Nabanita C. Nag, 48, Executive Vice President and Chief Legal Officer Present position since July 1, 2022. Served as Senior Vice President and Chief Legal Officer from March 1, 2022 to July 1, 2022. Served as General Counsel - Corporate from August 31, 2020 to March 1, 2022.
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Served more than three decades at Canadian National in various positions of increasing responsibility across Canada and North America, concluding career as Senior Vice President and Chief Transportation Officer. Claude E. Elkins, Jr., 59, Executive Vice President and Chief Marketing Officer Present position since December 1, 2021.
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Served as Director Investor Relations from July 1, 2017 to March 15, 2019. K21 PART II NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
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K23 PART II NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities STOCK INFORMATION Common Stock is owned by 18,962 stockholders of record as of December 31, 2023, and is traded on the New York Stock Exchange under the symbol “NSC.” ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of the Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares that may yet be Purchased under the Publicly Announced Plans or Programs (2) October 1-31, 2023 270,465 $ 197.70 269,938 $ 6,933,309,430 November 1-30, 2023 159,957 202.48 156,646 6,901,566,364 December 1-31, 2023 145,664 229.80 145,398 6,868,152,575 Total 576,086 571,982 (1) Of this amount, 4,104 represent shares tendered by employees in connection with the exercise of stock options under the stockholder-approved Long-Term Incentive Plan (LTIP).
Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities STOCK INFORMATION Common Stock is owned by 18,025 stockholders of record as of December 31, 2024, and is traded on the New York Stock Exchange under the symbol “NSC.” ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares that may yet be Purchased under Publicly Announced Plans or Programs (2) October 1-31, 2024 — $ — — $ 6,868,152,575 November 1-30, 2024 143 275.52 — 6,868,152,575 December 1-31, 2024 335 233.35 — 6,868,152,575 Total 478 — (1) Of this amount, 478 represent shares tendered by employees in connection with the exercise of stock options under the stockholder-approved Long-Term Incentive Plan (LTIP).
(2) On March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to $10.0 billion of Common Stock beginning April 1, 2022. As of December 31, 2023, $6.9 billion remains authorized for repurchase, until such amount is exhausted. Item 6. [Reserved] K22
(2) On March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to $10.0 billion of Common Stock beginning April 1, 2022. As of December 31, 2024, $6.9 billion remains authorized for repurchase, until such amount is exhausted. Item 6. [Reserved] K24

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRevenues 2023 2022 2023 2022 2021 vs. 2022 vs. 2021 ($ in millions) (% change) Merchandise: Agriculture, forest and consumer products $ 2,530 $ 2,493 $ 2,251 1 % 11 % Chemicals 2,054 2,148 1,951 (4 %) 10 % Metals and construction 1,634 1,652 1,562 (1 %) 6 % Automotive 1,135 1,038 905 9 % 15 % Merchandise 7,353 7,331 6,669 — % 10 % Intermodal 3,090 3,681 3,163 (16 %) 16 % Coal 1,713 1,733 1,310 (1 %) 32 % Total $ 12,156 $ 12,745 $ 11,142 (5 %) 14 % Units 2023 2022 2023 2022 2021 vs. 2022 vs. 2021 (in thousands) (% change) Merchandise: Agriculture, forest and consumer products 734.3 723.0 725.5 2 % — % Chemicals 515.0 540.1 529.7 (5 %) 2 % Metals and construction 634.1 634.6 669.0 — % (5 %) Automotive 361.5 339.1 345.4 7 % (2 %) Merchandise 2,244.9 2,236.8 2,269.6 — % (1 %) Intermodal 3,822.4 3,913.1 4,104.1 (2 %) (5 %) Coal 677.1 684.6 658.0 (1 %) 4 % Total 6,744.4 6,834.5 7,031.7 (1 %) (3 %) Revenue per Unit 2023 2022 2023 2022 2021 vs. 2022 vs. 2021 ($ per unit) (% change) Merchandise: Agriculture, forest and consumer products $ 3,445 $ 3,448 $ 3,102 — % 11 % Chemicals 3,989 3,978 3,684 — % 8 % Metals and construction 2,577 2,604 2,334 (1 %) 12 % Automotive 3,140 3,059 2,621 3 % 17 % Merchandise 3,275 3,277 2,938 — % 12 % Intermodal 808 941 771 (14 %) 22 % Coal 2,530 2,532 1,991 — % 27 % Total 1,802 1,865 1,584 (3 %) 18 % K26 Revenues decreased $589 million in 2023 but increased $1.6 billion in 2022 compared to the prior years.
Biggest changeRevenues 2024 2023 2024 2023 2022 vs. 2023 vs. 2022 ($ in millions) (% change) Merchandise: Agriculture, forest and consumer products $ 2,521 $ 2,530 $ 2,493 — % 1 % Chemicals 2,123 2,054 2,148 3 % (4 %) Metals and construction 1,682 1,634 1,652 3 % (1 %) Automotive 1,144 1,135 1,038 1 % 9 % Merchandise 7,470 7,353 7,331 2 % — % Intermodal 3,042 3,090 3,681 (2 %) (16 %) Coal 1,611 1,713 1,733 (6 %) (1 %) Total $ 12,123 $ 12,156 $ 12,745 — % (5 %) Units 2024 2023 2024 2023 2022 vs. 2023 vs. 2022 (in thousands) (% change) Merchandise: Agriculture, forest and consumer products 741.7 734.3 723.0 1 % 2 % Chemicals 518.3 515.0 540.1 1 % (5 %) Metals and construction 641.6 634.1 634.6 1 % — % Automotive 362.7 361.5 339.1 — % 7 % Merchandise 2,264.3 2,244.9 2,236.8 1 % — % Intermodal 4,107.7 3,822.4 3,913.1 7 % (2 %) Coal 684.8 677.1 684.6 1 % (1 %) Total 7,056.8 6,744.4 6,834.5 5 % (1 %) Revenue per Unit 2024 2023 2024 2023 2022 vs. 2023 vs. 2022 ($ per unit) (% change) Merchandise: Agriculture, forest and consumer products $ 3,399 $ 3,445 $ 3,448 (1 %) — % Chemicals 4,096 3,989 3,978 3 % — % Metals and construction 2,621 2,577 2,604 2 % (1 %) Automotive 3,155 3,140 3,059 — % 3 % Merchandise 3,299 3,275 3,277 1 % — % Intermodal 740 808 941 (8 %) (14 %) Coal 2,352 2,530 2,532 (7 %) — % Total 1,718 1,802 1,865 (5 %) (3 %) K28 Revenues decreased $33 million in 2024 and $589 million in 2023 compared to the prior years.
Information about us, including information that may be deemed material, may also be announced by posts on our social media channels, including X (formerly known as Twitter) (www.twitter.com/nscorp) and LinkedIn (www.linkedin.com/company/norfolk-southern). We may also use our website and social media channels for the purpose of complying with our disclosure obligations under Regulation FD.
Information about us, including information that may be deemed material, may also be announced by posts on our social media channels, including X (formerly known as Twitter) (x.com/nscorp) and LinkedIn (www.linkedin.com/company/norfolk-southern). We may also use our website and social media channels for the purpose of complying with our disclosure obligations under Regulation FD.
“Properties” are stated principally at cost and are depreciated using the group method whereby assets with similar characteristics, use, and expected lives are grouped K35 together in asset classes and depreciated using a composite depreciation rate. See Note 1 for a more detailed discussion of assumptions and estimates.
“Properties” are stated principally at cost and are depreciated using the group method whereby assets with similar characteristics, use, and expected lives are grouped together in asset classes and depreciated using a composite depreciation rate. See Note 1 for a more detailed discussion of assumptions and estimates.
K37 Additional Information Investors and others should note that we routinely use the Investor Relations, Performance Metrics and Sustainability sections of our website (norfolksouthern.investorroom.com/key-investor-information, norfolksouthern.investorroom.com/weekly-performance-reports & www.norfolksouthern.com/sustainability) to post presentations to investors and other important information, including information that may be deemed material to investors.
Additional Information Investors and others should note that we routinely use the Investor Relations, Performance Metrics and Sustainability sections of our website (norfolksouthern.investorroom.com/key-investor-information, norfolksouthern.investorroom.com/weekly-performance-reports & www.norfolksouthern.com/sustainability) to post presentations to investors and other important information, including information that may be deemed material to investors.
Reduced shipments of crude oil, organic chemicals, and natural gas liquids, more than offset the increases in solid waste and other petroleum products. Volume declines for crude oil were driven by soft demand in the energy markets. Organic chemicals and natural gas liquids volume declined as a result K27 of lower demand.
Reduced shipments of crude oil, organic chemicals, and natural gas liquids, more than offset the increases in solid waste and other petroleum products. Volume declines for crude oil were driven by soft demand in the energy markets. Organic chemicals and natural gas liquids volume declined as a result of lower demand.
K34 Incident Contingencies We are currently involved in certain environmental response and remediation activities and subject to numerous legal proceedings and regulatory inquiries and investigations relating to the Incident. We have accrued estimates of the probable and reasonably estimable costs for the resolution of these matters.
Incident Contingencies We are currently involved in certain environmental response and remediation activities and subject to numerous legal proceedings and regulatory inquiries and investigations relating to the Incident. We have accrued estimates of the probable and reasonably estimable costs for the resolution of these matters.
OTHER MATTERS Labor Agreements Approximately 80% of our railroad employees are covered by collective bargaining agreements with various labor unions. Pursuant to the Railway Labor Act, these agreements remain in effect until new agreements are reached, or until the bargaining procedures mandated by the Railway Labor Act are completed.
OTHER MATTERS Labor Agreements Approximately 80% of our railroad employees are covered by collective bargaining agreements with various labor unions. Pursuant to the Railway Labor Act (RLA), these agreements remain in effect until new agreements are reached, or until the bargaining procedures mandated by the RLA are completed.
Estimates associated with the legal proceedings to which we are subject are based on information that is currently available, including but not limited to an assessment of the proceedings and the potential and likely results of such proceedings.
Estimates associated with the legal proceedings to K36 which we are subject are based on information that is currently available, including but not limited to an assessment of the proceedings and the potential and likely results of such proceedings.
We utilize an independent actuarial consulting firm’s studies to assist us in selecting appropriate actuarial assumptions and valuing related liabilities. For 2023, we assumed a long-term investment rate of return of 8.0%, which was supported by our long-term total rate of return on pension plan assets since inception, as well as our expectation of future returns.
We utilize an independent actuarial consulting firm’s studies to assist us in selecting appropriate actuarial assumptions and valuing related liabilities. For 2024, we assumed a long-term investment rate of return of 8.0%, which was supported by our long-term total rate of return on pension plan assets since inception, as well as our expectation of future returns.
Furthermore, certain costs may be recoverable under our insurance policies in effect at the date of the Incident or from third parties. Any amounts that are recoverable under our insurance policies or from third parties will be reflected in the period in which recovery is considered probable. See Note 17 for more detailed information as it pertains to these contingencies.
Furthermore, certain costs may be recoverable under our insurance policies in effect at the date of the Incident or from third parties. Any amounts that are recoverable under our insurance policies or from third parties will be reflected in the period in which recovery is considered probable. See Note 18 for more detailed information as it pertains to these contingencies.
Railway operating revenues declined 5% due to lower average revenue per unit, the result of lower fuel surcharge revenue and decreased intermodal storage service revenues partially offset by favorable pricing and mix. Additionally, lower volumes contributed to the decline in revenues. Expenses associated with the Incident for the year were $1.1 billion.
Railway operating revenues declined 5% due to lower average revenue per unit, the result of lower fuel surcharge revenue and decreased intermodal storage service revenues partially offset by favorable pricing and mix. Additionally, lower volumes contributed to the decline in revenues. Net expenses associated with the Incident for the year 2023 were $1.1 billion.
The accuracy of our estimate of the liability is subject to inherent limitation given the difficulty of predicting future events and, as such, the ultimate loss sustained may vary from the estimated liability recorded. See Note 17 for a more detailed discussion of the assumptions and estimates we use for personal injury.
The accuracy of our estimate of the liability is subject to inherent limitation given the difficulty of predicting future events and, as such, the ultimate loss sustained may vary from the estimated liability recorded. See Note 18 for a more detailed discussion of the assumptions and estimates we use for personal injury.
Pensions and Other Postretirement Benefits Accounting for pensions and other postretirement benefit plans requires us to make several estimates and assumptions (Note 12). These include the expected rate of return from investment of the plans’ assets and the expected retirement age of employees as well as their projected earnings and mortality.
Pensions and Other Postretirement Benefits Accounting for pensions and other postretirement benefit plans requires us to make several estimates and assumptions (Note 13). These include the expected rate of return from investment of the plans’ assets and the expected retirement age of employees as well as their projected earnings and mortality.
In 2023, the rise was the result of increased volume. Average revenue per unit was flat, the result of lower fuel surcharge revenue offset by pricing gains. Increases in ethanol and fertilizer shipments more than offset declines in shipments of wood chips and graphic paper. Increased market demand led to volume gains in ethanol and fertilizer.
Average revenue per unit was flat, the result of lower fuel surcharge revenue offset by pricing gains. Increases in ethanol and fertilizer shipments more than offset declines in shipments of wood chips and graphic paper. Increased market demand led to volume gains in ethanol and fertilizer.
Market Risks We manage overall exposure to fluctuations in interest rates by issuing both fixed- and floating- rate debt instruments. At December 31, 2023, we have no outstanding debt subject to interest rate fluctuations.
Market Risks We manage overall exposure to fluctuations in interest rates by issuing both fixed- and floating- rate debt instruments. At December 31, 2024, we have no outstanding debt subject to interest rate fluctuations.
K25 DETAILED RESULTS OF OPERATIONS Railway Operating Revenues The following tables present a three-year comparison of revenues, volumes (units), and average revenue per unit by commodity group.
K27 DETAILED RESULTS OF OPERATIONS Railway Operating Revenues The following tables present a three-year comparison of revenues, volumes (units), and average revenue per unit by commodity group.
In addition, we believe our currently-available borrowing capacity, access to additional financing, ability to reduce shareholder distributions, including share repurchases, and ability to moderate or defer property additions provide additional flexibility to meet our ongoing obligations in the short- and long-term.
In addition, we believe our currently-available borrowing capacity, access to additional financing, ability to reduce shareholder distributions, and ability to moderate or defer property additions provide additional flexibility to meet our ongoing obligations in the short- and long-term.
FORWARD-LOOKING STATEMENTS Certain statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended.
FORWARD-LOOKING STATEMENTS Certain statements in this report, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations, are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended.
A one-percentage point decrease to this rate of return assumption would result in a $25 million increase in annual pension expense.
A one-percentage point decrease to this rate of return assumption would result in a $24 million increase in annual pension expense.
Our current estimates of future environmental cleanup and remediation liabilities related to the Incident may change over time due to various factors, including but not limited to, the nature and extent of required future cleanup and removal activities (including those resulting from soil, water, sediment, and air assessment and investigative activities that are and will continue to be conducted at the site), and the extent and duration of governmental oversight, amongst other factors.
Our current estimates of future environmental cleanup and remediation liabilities related to the Incident may change over time due to various factors, including but not limited to, the nature and extent of required future cleanup and removal activities (including those resulting from soil, water, sediment, and air assessment and investigative activities conducted at the site), and the extent and duration of governmental oversight, amongst other factors.
Market risk for fixed-rate debt is estimated as the potential increase in fair value resulting from a one-percentage point decrease in interest rates as of December 31, 2023 and amounts to an increase of approximately $1.7 billion to the fair value of our debt at December 31, 2023.
Market risk for fixed-rate debt is estimated as the potential increase in fair value resulting from a one-percentage point decrease in interest rates as of December 31, 2024 and amounts to an increase of approximately $1.5 billion to the fair value of our debt at December 31, 2024.
A significant portion of our annual capital spending relates to self-constructed assets. Costs related to repairs and maintenance activities that, in our judgment, do not extend an asset’s useful life or increase its utility are expensed when such repairs are performed. Depreciation expense for 2023 totaled $1.3 billion.
A significant portion of our annual capital spending relates to self-constructed assets. Costs related to repairs and K37 maintenance activities that, in our judgment, do not extend an asset’s useful life or increase its utility are expensed when such repairs are performed. Depreciation expense for 2024 totaled $1.4 billion.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Norfolk Southern Corporation and Subsidiaries The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes. Refer to Item 8 “Notes to Consolidated Financial Statements” for all “Note” references.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes. Refer to Item 8 “Notes to Consolidated Financial Statements” for all “Note” references.
A one-percentage point decrease to this discount rate assumption would result in a $15 million increase in annual pension expense. Properties and Depreciation Most of our assets are long-lived railway properties (Note 7).
A one-percentage point decrease to this discount rate assumption would result in a $14 million increase in annual pension expense. Properties and Depreciation Most of our assets are long-lived railway properties (Note 8).
Income Taxes Our net deferred tax liability totaled $7.2 billion at December 31, 2023 (Note 4). This liability is estimated based on the expected future tax consequences of items recognized in the financial statements.
Income Taxes Our net deferred tax liability totaled $7.4 billion at December 31, 2024 (Note 5). This liability is estimated based on the expected future tax consequences of items recognized in the financial statements.
A valuation allowance is recorded if we expect that it is more likely than not that deferred tax assets will not be realized. We have a $31 million valuation allowance on $570 million of deferred tax assets as of December 31, 2023, reflecting the expectation that substantially all of these assets will be realized.
A valuation allowance is recorded if we expect that it is more likely than not that deferred tax assets will not be realized. We have a $42 million valuation allowance on $467 million of deferred tax assets as of December 31, 2024, reflecting the expectation that substantially all of these assets will be realized.
FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES Cash provided by operating activities, our principal source of liquidity, was $3.2 billion in 2023, $4.2 billion in 2022, and $4.3 billion in 2021. The decrease in 2023 reflects lower operating results, offset in part by changes in working capital.
FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES Cash provided by operating activities, our principal source of liquidity, was $4.1 billion in 2024, $3.2 billion in 2023, and $4.2 billion in 2022. The increase in 2024 reflects improved operating results. The decrease in 2023 reflects lower operating results, offset in part by changes in working capital.
Adjusted 2023 Adjusted (non-GAAP) 2022 2023 vs. vs.
Adjusted 2024 (Non-GAAP) Adjusted 2023 (Non-GAAP) 2022 Adjusted 2024 (Non-GAAP) vs.
Our composite depreciation rates for 2023 are disclosed in Note 7; a one-year increase (or decrease) in the estimated average useful lives of depreciable assets would have resulted in an approximate $47 million decrease (or increase) to annual depreciation expense.
Our composite depreciation rates for 2024 are disclosed in Note 8; a one-year increase (or decrease) in the estimated average useful lives of depreciable assets would have resulted in an approximate $51 million decrease (or increase) to annual depreciation expense.
The income tax effects of this non-GAAP adjustment were calculated based on the applicable tax rates to which the non-GAAP adjustment related. We use these non-GAAP financial measures internally and believe this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding the 2023 costs arising from the Incident.
The income tax effects of these non-GAAP adjustments were calculated based on the applicable tax rates to which the non-GAAP adjustments related. We use these non-GAAP financial measures internally and believe this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding these items.
The decrease in 2023 was a result of decreased volumes. Average revenue per unit was flat as lower fuel surcharge revenue and pricing declines were offset by positive mix. The increase in 2022 was due to higher average revenue per unit, driven by pricing gains and higher fuel surcharge revenue, and increased volumes.
The decrease in 2024 was a result of lower average revenue per unit, driven by decreased pricing and lower fuel surcharge revenue, partially offset by positive mix and increased volume. The decrease in 2023 was a result of decreased volumes. Average revenue per unit was flat as lower fuel surcharge revenue and pricing declines were offset by positive mix.
Revenues declined in 2023 as a result of lower average revenue per unit, driven by decreases in fuel surcharge revenue and intermodal storage revenues, and volume declines.
Revenues decreased in 2024 as a result of lower average revenue per unit, driven by lower fuel surcharge revenue, adverse mix, and decreased pricing, partially offset by higher volume. Revenues declined in 2023 as a result of lower average revenue per unit, driven by decreases in fuel surcharge and intermodal storage revenues, and volume declines.
The effective income tax rate in 2022 and 2021 reflects favorable benefits associated with stock-based compensation and various state law changes (Note 4), while 2021 also benefited from higher COLI returns. For 2024, we expect an effective income tax rate between 23% and 24%.
The 2023 effective rate benefited from tax credits and higher COLI returns offset by reduced benefits from stock-based compensation. The effective income tax rate in 2022 reflects favorable benefits associated with stock-based compensation and various state law changes (Note 5). For 2025, we expect an effective income tax rate between 23% and 24%.
Cash provided by financing activities was $115 million in 2023, while cash used in financing activities was $3.0 billion in 2022 and $3.3 billion in 2021. The increase in cash provided by financing activities in 2023 reflects lower repurchases of Common Stock and increased proceeds from borrowings, partially offset by higher debt repayments.
Cash used in financing activities was $1.2 billion in 2024, while cash provided by financing activities was $115 million in 2023, and cash used in financing activities was $3.0 billion in 2022. The increase in cash used in financing activities in 2024 reflects lower proceeds from borrowing partially offset by the absence of repurchases of Common Stock.
INTERMODAL revenues decreased in 2023 but increased in 2022 compared with the prior years. The decrease in 2023 was the result of lower average revenue per unit, driven by reduced storage service charges and lower fuel surcharge revenue, and decreased volume.
The decrease in 2023 was the result of lower average revenue per unit, driven by reduced storage service revenues and lower fuel surcharge revenue, and decreased volume.
Fuel surcharge revenues totaled $1.2 billion, $1.6 billion, and $622 million in 2023, 2022, and 2021, respectively. The change in fuel surcharge revenues in each period was primarily driven by fluctuations in fuel commodity prices. For 2024, we expect that revenue will increase modestly driven by higher volumes.
Fuel surcharge revenues totaled $962 million, $1.2 billion, and $1.6 billion in 2024, 2023, and 2022, respectively. The decline in fuel surcharge revenues in each period was primarily driven by fluctuations in fuel commodity prices. For 2025, we expect that revenue will increase driven by higher volumes. MERCHANDISE revenues increased in both 2024 and 2023 compared with the prior years.
Equipment rents, which includes our cost of using equipment (mostly freight cars) owned by other railroads or private owners less the rent paid to us for the use of our equipment, increased in both periods. In 2023, the increase was due to increased intermodal equipment expenses, higher freight car lease costs, and decreased equity in TTX Company's (TTX) earnings.
The increase in purchased services in 2023 was due to higher technology-related costs, increased operational and transportation expenses, and higher engineering activity. Equipment rents , which includes our cost of using equipment (mostly freight cars) owned by other railroads or private owners less the rent paid to us for the use of our equipment, increased in both periods.
In May 2023, we renewed our accounts receivable securitization program with a maximum borrowing capacity of $400 million. Amounts under our accounts receivable securitization program are borrowed and repaid from time to time in the ordinary course for general corporate and cash management purposes. The term of our accounts receivable securitization program expires in May 2024.
Amounts under our accounts receivable securitization program are borrowed and repaid from time to time in the ordinary course for general corporate and cash management purposes. The term of our accounts receivable securitization program expires in May 2025.
Intermodal units by market were as follows: 2023 2022 2023 2022 2021 vs. 2022 vs. 2021 (units in thousands) (% change) Domestic 2,371.6 2,573.6 2,630.6 (8 %) (2 %) International 1,450.8 1,339.5 1,473.5 8 % (9 %) Total 3,822.4 3,913.1 4,104.1 (2 %) (5 %) Domestic volume decreased in both 2023 and 2022 compared with the prior years.
Intermodal units by market were as follows: 2024 2023 2024 2023 2022 vs. 2023 vs. 2022 (units in thousands) (% change) Domestic 2,500.0 2,371.6 2,573.6 5 % (8 %) International 1,607.7 1,450.8 1,339.5 11 % 8 % Total 4,107.7 3,822.4 3,913.1 7 % (2 %) Domestic volume increased in 2024 but decreased in 2023 compared with the prior years.
As shown in the following table, total tonnage decreased in 2023 but increased 2022. 2023 2022 2023 2022 2021 vs. 2022 vs. 2021 (tons in thousands) (% change) Utility 30,419 35,705 33,169 (15 %) 8 % Export 31,005 25,887 24,886 20 % 4 % Domestic metallurgical 11,096 11,307 11,804 (2 %) (4 %) Industrial 3,372 3,765 3,595 (10 %) 5 % Total 75,892 76,664 73,454 (1 %) 4 % Utility coal tonnage decreased in 2023 but increased in 2022 compared with the prior years.
As shown in the following table, total tonnage increased in 2024 but decreased in 2023 compared to prior years. 2024 2023 2024 2023 2022 vs. 2023 vs. 2022 (tons in thousands) (% change) Utility 29,577 30,419 35,705 (3 %) (15 %) Export 33,309 31,005 25,887 7 % 20 % Domestic metallurgical 10,088 11,096 11,307 (9 %) (2 %) Industrial 3,728 3,372 3,765 11 % (10 %) Total 76,702 75,892 76,664 1 % (1 %) Utility coal tonnage decreased in both 2024 and 2023 compared with the prior years.
Eastern Ohio incident During 2023, we recorded $1.1 billion for costs primarily associated with environmental matters and legal proceedings. We recorded $101 million of recoveries from claims made under our insurance policies, which are included in the total amount recorded in 2023.
The total amount recorded in 2024 is net of $650 million of insurance recoveries, resulting from claims made under our insurance policies in effect at the time of the Incident. During 2023, we recorded $1.1 billion for costs primarily associated with environmental matters and legal proceedings.
The table below reflects the components of the revenue change by major commodity group. 2023 vs. 2022 2022 vs. 2021 Increase (Decrease) Increase (Decrease) ($ in millions) Merchandise Intermodal Coal Merchandise Intermodal Coal Volume $ 26 $ (85) $ (19) $ (96) $ (147) $ 53 Fuel surcharge revenue (119) (208) (23) 455 417 79 Rate, mix and other 115 (298) 22 303 248 291 Total $ 22 $ (591) $ (20) $ 662 $ 518 $ 423 Approximately 95% of our revenue base is covered by contracts that include negotiated fuel surcharges.
The table below reflects the components of the revenue change by major commodity group. 2024 vs. 2023 2023 vs. 2022 Increase (Decrease) Increase (Decrease) ($ in millions) Merchandise Intermodal Coal Merchandise Intermodal Coal Volume $ 64 $ 231 $ 19 $ 26 $ (85) $ (19) Fuel surcharge revenue (131) (101) (29) (119) (208) (23) Rate, mix and other 184 (178) (92) 115 (298) 22 Total $ 117 $ (48) $ (102) $ 22 $ (591) $ (20) Approximately 95% of our revenue base is covered by contracts that include negotiated fuel surcharges.
Industrial coal tonnage decreased in 2023 but increased in 2022 compared with the prior years. The decrease in 2023 was due to reduced coal shipments related to customer sourcing changes. The increase in 2022 was the result of increased demand.
The decrease in 2023 was due to reduced coke shipments resulting from idled customer facilities. Industrial coal tonnage increased in 2024 but decreased in 2023 compared with the prior years. The growth in 2024 was due to higher demand. The decrease in 2023 was due to reduced coal shipments related to customer sourcing changes.
We had no amounts outstanding under this program at December 31, 2023 and $100 million outstanding at December 31, 2022. Our available borrowing capacity was $400 million at December 31, 2023 and $300 million at December 31, 2022. In January 2024, we renewed and amended our $800 million credit agreement.
We had no amounts outstanding under this program and our available borrowing capacity was $400 million at both December 31, 2024 and December 31, 2023. In January 2024, we renewed and amended our $800 million credit agreement. The amended agreement expires in January 2029, and provides for borrowings at prevailing rates and includes covenants.
The decline in net income and diluted earnings per share also reflects the absence of a prior year $136 million deferred tax benefit, a result of an enactment of a change in the corporate income tax rate in the Commonwealth of Pennsylvania in 2022.
The decline in net income and diluted earnings per share also reflects the absence of a prior year $136 million deferred tax benefit, a result of an enactment of a change in the corporate income tax rate in the Commonwealth of Pennsylvania in 2022. Railway operating ratio deteriorated to 76.5 percent. The following tables adjust our 2024 and 2023 U.S.
Off balance sheet arrangements consist primarily of unrecognized obligations, including future interest payments on fixed-rate long-term debt, the pending purchase of the assets of CSR, and unconditional purchase obligations which are included in the table above. Cash used in investing activities was $2.2 billion in 2023, $1.6 billion in 2022, and $1.2 billion in 2021.
Off balance sheet arrangements consist primarily of unrecognized obligations, including future interest payments on fixed-rate long-term debt and unconditional purchase obligations, which are included in the table above.
We consumed 377 million gallons of diesel fuel in 2023, compared with 376 million gallons in 2022 and 384 million gallons in 2021. Depreciation expense increased in both periods. In both periods, the increase was a reflection of reinvestment in our infrastructure, rolling stock, and technology.
Locomotive fuel consumption was down in 2024 and nearly flat in 2023 compared to prior periods. We consumed 373 million gallons of diesel fuel in 2024, compared with 377 million gallons in 2023 and 376 million gallons in 2022. Depreciation expense increased in both periods compared to the prior years, reflecting reinvestment in our infrastructure, rolling stock, and technology.
The decrease in 2023 was due to low natural gas prices, high stockpiles, and unplanned customer outages. The increase in 2022 was due to increased demand and service improvements. Export coal tonnage increased in both periods compared with prior years. The increases in both years were a result of increased demand and coal supply.
The decline in 2024 was due to reduced demand from continued low natural gas prices and high stockpiles. The decrease in 2023 was due to low natural gas prices, high stockpiles, and unplanned customer outages. Export coal tonnage increased in both 2024 and 2023 compared with the prior years.
Compensation and benefits increased in 2023, reflecting changes in: • employee activity levels (up $138 million), • pay rates (up $86 million), • overtime (up $9 million), • incentive and stock-based compensation (down $30 million), and • other (down $5 million).
Compensation and benefits increased in 2024, reflecting changes in: • pay rates (up $91 million), • incentive and stock-based compensation (up $56 million), • overtime (down $37 million), • employee activity levels (down $68 million), and • other (down $38 million).
Automotive revenues rose in both 2023 and 2022 compared with the prior years. The increase in revenues in 2023 was driven by increased volume and higher average revenue per unit, driven by favorable price. Volume increases were due to higher finished vehicle inventory levels available for rail transportation and improved equipment cycle times.
Volume increases were due to higher finished vehicle inventory levels available for rail transportation and improved equipment cycle times. INTERMODAL revenues decreased in both 2024 and 2023 compared with the prior years.
Higher revenue for 2022 was the result of increased average revenue per unit, driven by higher fuel surcharge revenue, pricing gains, improved mix, and increased intermodal storage service charges, partially offset by volume declines.
The decrease in 2024 was the result of lower average revenue per unit, driven by decreased pricing, lower fuel surcharge revenue, adverse mix, and declines in storage service revenues, partially offset by higher volume.
SUMMARIZED RESULTS OF OPERATIONS 2023 2022 2023 2022 2021 vs. 2022 vs. 2021 ($ in millions, except per share amounts) (% change) Income from railway operations $ 2,851 $ 4,809 $ 4,447 (41 %) 8 % Net income $ 1,827 $ 3,270 $ 3,005 (44 %) 9 % Diluted earnings per share $ 8.02 $ 13.88 $ 12.11 (42 %) 15 % Railway operating ratio (percent) 76.5 62.3 60.1 23 % 4 % Income from railway operations, net income and diluted earnings per share declined in 2023 compared to 2022, driven by expenses incurred with our response efforts to the Incident (Note 17), lower railway operating revenues, and higher non-Incident-related railway operating expenses.
SUMMARIZED RESULTS OF OPERATIONS 2024 2023 2024 2023 2022 vs. 2023 vs. 2022 ($ in millions, except per share amounts) (% change) Railway operating revenues $ 12,123 $ 12,156 $ 12,745 — % (5 %) Railway operating expenses $ 8,052 $ 9,305 $ 7,936 (13 %) 17 % Income from railway operations $ 4,071 $ 2,851 $ 4,809 43 % (41 %) Net income $ 2,622 $ 1,827 $ 3,270 44 % (44 %) Diluted earnings per share $ 11.57 $ 8.02 $ 13.88 44 % (42 %) Railway operating ratio (percent) 66.4 76.5 62.3 (13 %) 23 % Income from railway operations, net income and diluted earnings per share increased in 2024 compared to 2023, primarily as a result of lower railway operating expenses.
Moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements. We largely bargain nationally in concert with other major railroads, represented by the National Carriers’ Conference Committee.
Moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements. We largely bargain nationally in concert with other major railroads, represented by the National Carriers’ Conference Committee (NCCC). Under current moratorium provisions, neither party was permitted to serve notice to compel a new round of mandatory collective bargaining until November 1, 2024.
The increase in 2023 was driven by ocean carriers favoring inland point intermodal traffic, partially offset by a decrease in imports. The decline in 2022 was the result of supply chain constraints, chassis shortages, and excess retail inventory. K28 COAL revenues decreased in 2023 but increased in 2022 compared with the prior years.
The increase in 2024 was driven by increased demand, growth in existing customers, and increased movements of empty containers. The increase in 2023 was driven by ocean carriers favoring inland point intermodal traffic, partially offset by a decrease in imports. K30 COAL revenues decreased in 2024 and 2023 compared with the prior years.
The increase in 2022 was primarily the result of higher costs associated with unfavorable personal injury case development, increased environmental remediation expenses, and higher lading and property damage costs. Other expense increased in 2023 primarily due to lower gains from operating property sales and increased travel-related expenses.
The decrease in 2023 was primarily the result of lower personal injury case development, lower costs related to environmental remediation matters unrelated to the Incident, and a claims-related recovery. Other expense decreased in 2024 primarily due to increased gains from operating property sales, lower non-income-based taxes, and lower relocation and travel-related expenses.
In January 2024, we also entered into a term loan credit agreement that established a 364-day, $1.0 billion, unsecured delayed draw term loan facility under which we can borrow for general corporate purposes. The term loan credit agreement provides for borrowing at prevailing rates and includes covenants that align with the $800 million credit agreement.
We had no amounts outstanding under this facility at either December 31, 2024 or December 31, 2023, and we are in compliance with all of its covenants. In January 2024, we also entered into a term loan credit agreement that established a 364-day, $1.0 billion, unsecured delayed draw term loan facility under which we could borrow for general corporate purposes.
The increase in 2023 was the result of higher net returns on corporate-owned life insurance (COLI) and increased interest income, partially offset by lower gains from non-operating property sales. The decrease in 2022 was driven by lower net returns on COLI partially offset by a higher net pension benefit and increased interest income.
The increase in 2023 was the result of higher net returns on COLI and increased interest income, partially offset by lower gains from non-operating property sales. Income Taxes The effective income tax rate was 21.2% in 2024, compared with 21.3% in 2023 and 20.8% in 2022.
MERCHANDISE revenues increased in both 2023 and 2022 compared with the prior years. In 2023, revenues were slightly higher as pricing and volume gains were nearly offset by lower fuel surcharge revenue and unfavorable mix. Increased volumes in automotive and agriculture, forest and consumer shipments were partially offset by decreased chemicals shipments.
Increased volumes in automotive and agriculture, forest and consumer shipments were partially offset by decreased chemicals shipments. Agriculture, forest and consumer products revenues decreased slightly in 2024 but increased in 2023 compared with the prior years.
In 2022, revenues rose due to higher average revenue per unit, driven by higher fuel surcharge revenue and increased pricing, partially offset by lower volume. Decreased volumes in metal and construction and automotive shipments more than offset higher chemical shipments. Agriculture, forest and consumer products revenues increased in both 2023 and 2022 compared with the prior years.
Automotive revenues rose in both 2024 and 2023 compared with the prior years. The increase in revenues in 2024 was driven by slightly higher average revenue per unit driven by increased price, partially offset by lower fuel surcharge revenue, and slightly higher volume.
In 2022, compensation and benefits increased, a result of changes in: • pay rates (up $188 million), • employee activity levels (up $51 million), • overtime (up $18 million), • incentive and stock-based compensation (down $79 million), and • other (up $1 million).
In 2023, compensation and benefits increased, a result of changes in: • employee activity levels (up $138 million), • pay rates (up $86 million), • overtime (up $9 million), • incentive and stock-based compensation (down $30 million), and • other (down $5 million). Our employment averaged 20,200 in 2024, compared with 20,300 in 2023, and 18,900 in 2022.
As a result, income from railway operations, net income, and diluted earnings per share declined compared to 2022, most significantly as a result of the direct costs from the Incident. Our financial results were further impacted by lower revenues and higher non-Incident-related operating expenses.
Income from railway operations, net income and diluted earnings per share declined in 2023 compared to 2022, driven by expenses incurred with our response efforts to the Incident, lower railway operating revenues, and higher K25 non-Incident-related railway operating expenses.
(non-GAAP) 2022 2021 2022 2021 ($ in millions, except per share amounts) (% change) Income from railway operations $ 3,967 $ 4,809 $ 4,447 (18 %) 8 % Net income $ 2,673 $ 3,270 $ 3,005 (18 %) 9 % Diluted earnings per share $ 11.74 $ 13.88 $ 12.11 (15 %) 15 % Railway operating ratio (percent) 67.4 62.3 60.1 8 % 4 % On a non-GAAP basis excluding the impact of direct costs resulting from the Incident, income from railway operations decreased in 2023 due to lower railway operating revenues and higher railway operating expenses.
Adjusted 2023 (Non-GAAP) Adjusted 2023 (Non-GAAP) vs. 2022 ($ in millions, except per share amounts) (% change) Railway operating expenses $ 7,977 $ 8,189 $ 7,936 (3 %) 3 % Income from railway operations $ 4,146 $ 3,967 $ 4,809 5 % (18 %) Net income $ 2,684 $ 2,673 $ 3,270 — % (18 %) Diluted earnings per share $ 11.85 $ 11.74 $ 13.88 1 % (15 %) Railway operating ratio (percent) 65.8 67.4 62.3 (2 %) 8 % On an adjusted basis, income from railway operations in 2024 increased due to lower adjusted railway operating expenses, with lower fuel prices, decreased costs of purchased services, and lower other expenses contributing significantly to the overall decline, and more than offsetting the decline in revenue.
The increases in both years were due to increased locomotive, freight car, and track materials costs. K31 Claims expense includes costs related to personal injury, property damage, and environmental matters. The decrease in 2023 was primarily the result of lower personal injury case development, lower costs related to environmental remediation matters unrelated to the Incident, and a claims-related recovery.
Materials expense increased in both 2024 and 2023. The increase in 2024 was due to higher freight car repairs expense, partially offset by lower locomotive materials spending. The increase in 2023 was due to increased locomotive, freight car, and track materials costs. Claims expense includes costs related to personal injury, property damage, and environmental matters.
Additionally, railway operating expenses reflected higher costs due to inflationary pressures, investments in operational resiliency, and higher service-related costs. Partially offsetting these increases were the impacts of lower fuel prices and the absence of retroactive wage increases recorded in 2022.
Partially offsetting these increases were the impacts of lower fuel prices and the absence of retroactive wage increases recorded in 2022.
Non-GAAP Reconciliation for 2023 Reported (GAAP) Eastern Ohio Incident Adjusted (non-GAAP) ($ in millions, except per share amounts) Income from railway operations $ 2,851 $ 1,116 $ 3,967 Income taxes $ 493 $ 270 $ 763 Net income $ 1,827 $ 846 $ 2,673 Diluted earnings per share $ 8.02 $ 3.72 $ 11.74 Railway operating ratio (percent) 76.5 (9.1) 67.4 K24 In the table below, references to 2023 results and related comparisons use the adjusted, non-GAAP results from the reconciliation in the table above.
Non-GAAP Reconciliation for 2024 Reported (GAAP) Gains on Railway Line Sales Restructuring and Other Charges Eastern Ohio Incident Shareholder Advisory Costs Deferred Income Tax Adjustment Adjusted (non-GAAP) ($ in millions, except per share amounts) Railway operating $ 8,052 $ 433 $ (183) $ (325) $ — $ — $ 7,977 expenses Income from railway $ 4,071 $ (433) $ 183 $ 325 $ — $ — $ 4,146 operations Net income $ 2,622 $ (327) $ 125 $ 247 $ 44 $ (27) $ 2,684 Diluted earnings $ 11.57 $ (1.44) $ 0.55 $ 1.09 $ 0.20 $ (0.12) $ 11.85 per share Railway operating ratio 66.4 3.6 (1.5) (2.7) — — 65.8 (percent) K26 Non-GAAP Reconciliation for 2023 Reported (GAAP) Eastern Ohio Incident Adjusted (non-GAAP) ($ in millions, except per share amounts) Railway operating expenses $ 9,305 $ (1,116) $ 8,189 Income from railway operations $ 2,851 $ 1,116 $ 3,967 Net income $ 1,827 $ 846 $ 2,673 Diluted earnings per share $ 8.02 $ 3.72 $ 11.74 Railway operating ratio (percent) 76.5 (9.1) 67.4 In the table below, references to 2024 and 2023 results and related comparisons use the adjusted, non-GAAP results from the reconciliations in the tables above.
We discuss our credit agreement and our accounts receivable securitization program in Note 9. Upcoming annual debt maturities are also disclosed in Note 9. Overall, our goal is to maintain a capital structure with appropriate leverage to support our business strategy and provide flexibility through business cycles.
Overall, our goal is to maintain a capital structure with appropriate leverage to support our business strategy and provide flexibility through business cycles.
Repurchases may be executed in the open market, through derivatives, accelerated repurchase and other negotiated transactions and through plans designed to comply with Rule 10b5-1(c) and Rule 10b-18 under the Securities and Exchange Act of 1934. Any near-term purchases under the program are expected to be made with internally-generated cash, cash on hand, or proceeds from borrowings.
The timing and volume of future share repurchases will be guided by our assessment of market conditions and other pertinent factors. Repurchases may be executed in the open market, through derivatives, accelerated repurchase and other negotiated transactions and through plans designed to comply with Rule 10b5-1(c) and Rule 10b-18 under the K35 Securities and Exchange Act of 1934.
In 2023, volume declined due to a decrease in freight demand as a result of reduced consumer consumption combined with high inventories, and increased truck competition. In 2022, volume declined due to service disruptions, terminal congestion, strong over-the-road competition, and increased truck availability. International volume increased in 2023 but decreased in 2022.
In 2024, volume increased due to growth in new and existing customers and improved service, partially offset by reduced demand for premium shipments. In 2023, volume declined due to a decrease in freight demand as a result of reduced consumer consumption combined with high inventories, and increased truck competition. International volume increased in both 2024 and 2023.
K32 Contractual obligations at December 31, 2023, including those that may have material cash requirements, include interest on fixed-rate long-term debt, long-term debt (Note 9), asset purchase of CSR (Note 17), unconditional purchase obligations (Note 17), long-term advances from Conrail Inc.
K34 Contractual obligations at December 31, 2024, including those that may have material cash requirements, include interest on fixed-rate long-term debt, long-term debt (Note 10), unconditional purchase obligations (Note 18), long-term advances from Conrail Inc. (Conrail) (Note 7), operating leases (Note 11), agreements with Consolidated Rail Corporation (CRC) (Note 7), and unrecognized tax benefits (Note 5).
Domestic metallurgical coal tonnage decreased in both 2023 and 2022 compared with the prior years. The decrease in 2023 was due to reduced coke shipments resulting from idled customer facilities. The decrease in 2022 was the result of reduced coke shipments related to customer sourcing changes and idled customer facilities.
The increase in 2024 was due to growth with our customers and increased production. The increase in 2023 was a result of increased demand and coal supply. Domestic metallurgical coal tonnage decreased in both 2024 and 2023 compared with the prior years. The decrease in 2024 was as a result of reduced customer demand.
The increase in 2023 was primarily driven by higher property additions and lower proceeds from property sales. In 2022, the increase is due to higher property additions partially offset by increased proceeds from property sales. Capital spending and track and equipment statistics can be found within the “Railway Property” section of Part I of this report on Form 10-K.
Capital spending and track and equipment statistics can be found within the “Railway Property” section of Part I of this report on Form 10-K. For 2025, we expect property additions to approximate $2.2 billion.
We expect that cash on hand combined with cash provided by operating activities will be sufficient to meet our ongoing obligations.
We had negative working capital of $357 million at December 31, 2024 and working capital of $639 million at December 31, 2023. Cash and cash equivalents totaled $1.6 billion at both December 31, 2024, and December 31, 2023. We expect that cash on hand combined with cash provided by operating activities will be sufficient to meet our ongoing obligations.
Volume gains in solid waste were due to growth with existing customers, while the gains in petroleum products were due to growth with existing customers and new business opportunities. In 2022, the increase was the result of higher average revenue per unit, driven by fuel surcharge revenue and pricing gains, and volume growth.
Volume gains in solid waste were due to growth with existing customers, while the gains in petroleum products were due to growth with existing customers and new business opportunities. Metals and construction revenues were higher in 2024 but lower in 2023 compared with the prior years.
Total 2024 2025 - 2026 2027 - 2028 2029 and Subsequent ($ in millions) Interest on fixed-rate long-term debt $ 20,184 $ 772 $ 1,524 $ 1,429 $ 16,459 Long-term debt principal 18,112 4 1,158 1,223 15,727 Asset purchase of CSR 1,662 1,662 — — — Unconditional purchase obligations 1,405 687 455 79 184 Long-term advances from Conrail 534 — — — 534 Operating leases 444 116 190 72 66 Agreements with CRC 237 44 88 88 17 Unrecognized tax benefits* 55 — — — 55 Total $ 42,633 $ 3,285 $ 3,415 $ 2,891 $ 33,042 * This amount is shown in the 2029 and Subsequent column because the year of settlement cannot be reasonably estimated.
Total 2025 2026 - 2027 2028 - 2029 2030 and Subsequent ($ in millions) Interest on fixed-rate long-term debt $ 19,413 $ 776 $ 1,472 $ 1,383 $ 15,782 Long-term debt principal 18,108 555 1,223 1,212 15,118 Unconditional purchase obligations 1,225 519 455 95 156 Long-term advances from Conrail 534 — — — 534 Operating leases 314 89 116 62 47 Agreements with CRC 209 47 94 68 — Unrecognized tax benefits* 82 — — — 82 Total $ 39,885 $ 1,986 $ 3,360 $ 2,820 $ 31,719 * This amount is shown in the 2030 and Subsequent column because the year of settlement cannot be reasonably estimated.
The increase in 2022 was the result of higher average revenue per unit, due to higher fuel surcharge revenue, pricing gains, and increased storage service charges, partially offset by decreased volume.
In 2024, the decrease was the result of lower average revenue per unit driven by lower fuel surcharge revenue, partially offset by increased price, and increased volume. Increased volume in soybeans, corn, and feed were partially offset by lower volume in fertilizers and ethanol. Soybean volume increased due to spot opportunities.
In 2022, the decrease in cash used in financing activities reflects lower repurchases of Common Stock and increased proceeds from borrowings, partially offset by higher dividends. K33 Share repurchases of $622 million in 2023, $3.1 billion in 2022, and $3.4 billion in 2021 resulted in the retirement of 2.8 million, 12.6 million, and 12.7 million shares, respectively.
In 2023, the increase in cash provided by financing activities reflects lower repurchases of Common Stock and increased proceeds from borrowings, partially offset by higher debt repayments.
Volume declines in wood chips were due to customer mill closures, while lower market demand led to the decline in graphic paper. In 2022, the rise was the result of increased average revenue per unit, the result of higher fuel surcharge revenue and pricing gains, while volumes were nearly flat.
Volume declines in wood chips were due to customer mill closures, while lower market demand led to the decline in graphic paper. Chemicals revenues increased in 2024 but decreased in 2023 compared with the prior years.
The decrease in 2023 was due to lower locomotive fuel prices (down 20%), which decreased fuel expense by $275 million. The increase in 2022 was due to higher locomotive fuel prices (up 87%) which increased expenses by $634 million. Locomotive fuel consumption was nearly flat in 2023 and decreased 2% in 2022.
Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations, decreased in both 2024 and 2023. The decrease in both periods was due to lower locomotive fuel prices (down 15% in 2024 and 20% in 2023), which decreased fuel expense by $159 million and $275 million in 2024 and 2023, respectively.
K30 Purchased services and rents includes the costs of services purchased from external vendors and contractors, including the net costs of operating joint facilities with other railroads and the net cost of equipment rentals. 2023 2022 2023 2022 2021 vs. 2022 vs. 2021 ($ in millions) (% change) Purchased services $ 1,683 $ 1,565 $ 1,409 8 % 11 % Equipment rents 387 357 317 8 % 13 % Total $ 2,070 $ 1,922 $ 1,726 8 % 11 % The increase in purchased services in 2023 was due to higher technology-related costs, increased operational and transportation expenses, and higher engineering activity.
K32 Purchased services includes the costs of services purchased from external vendors and contractors, including the net costs of operating joint facilities with other railroads. The decrease in purchased services in 2024 was due to lower lease costs and declines in technology-related and operational expenses, partially offset by higher volume-related expenses and Conrail-related activity.
In 2022, revenue growth was driven by higher average revenue per unit, the result of higher fuel surcharge revenue and pricing gains, partially offset by lower volume. Volumes fell largely as a result of decreased shipments of coil steel, iron and steel, and scrap metal driven by service disruptions and slower equipment cycle times.
In 2024, the increase was driven by higher average revenue per unit due to favorable price, partially offset by lower fuel surcharge revenue, and higher volume. Increased volume was due to higher demand in aggregates, kaolin, miscellaneous construction, and scrap metal, partially offset by lower demand for coil steel shipments.

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