What’s Happening With Norfolk Southern’s Coal Freight Business?

What’s Happening With Norfolk Southern’s Coal Freight Business?

Coal shipments have been trending higher for railroad companies, including Norfolk Southern (NYSE:NSC) over the recent quarters. The year 2021 marked a sharp rebound in economic activities, resulting in a surge in demand for oil and natural gas. The prices for both the fuels have seen a spike in 2021, with the U. S. WTI crude averaging $68 per barrel, reflecting 74% growth from the previous year average of $39, and the natural gas price for electricity generators rising more than 2x to $4. 99 MMBtu (Metric Million British Thermal Unit), compared to $2. 40 average for 2020. [1] This directly impacts the demand for coal. A rise in natural gas prices means its reduced usage as an energy source, compared to coal, and vice-versa. The overall demand for coal remained robust in 2021, with the total production rising 9% and it is expected to rise 6% in 2022, owing to the trends seen in natural gas prices. Higher production has meant increased demand for railroads. For Norfolk Southern, total volume has seen a rise of 18% to around 500K for the nine month period ending Sep 2021. This clubbed with a 7% rise in average revenue per unit, has