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Norfolk Southern Will Get Nice Ride From Exports, CEO Says

June 20, 2008

By Gregory Richards, The Virginian-Pilot, Norfolk, Va.

Jun. 20–Norfolk Southern Corp. expects its coal exports to increase more than 50 percent this year over 2007, said Wick Moorman, the Norfolk-based railroad’s chairman and chief executive, on Thursday.

The bulk of those exports, 20 million tons, is projected to move via its Lamberts Point Coal Terminal in Norfolk’s West Ghent neighborhood. Another five million tons probably will ship through the port of Baltimore, said Moorman, speaking at the Merrill Lynch Global Transportation Conference in New York.

Driving the export surge are the weak U.S. dollar, tight coal supplies worldwide and higher costs for shipping coal from Australia, a major coal exporting country, Moorman said in a speech that was broadcast over the Internet.

Most of the coal Norfolk Southern exports is metallurgical coal for steel mills, but some is steam coal for electrical power plants in Europe, he said.

The only thing limiting Norfolk Southern’s coal exports is the supply from the mines, Moorman said. The Lamberts Point terminal can ship up to 48 million tons a year, and the railroad still has coal hopper cars in storage. “We’re in good shape to handle the additional demand,” he said.

In addition to coal, demand remains strong for shipments of agricultural and metal products, Moorman said. Demand has slacked for freight related to the construction, chemicals, automotive and paper and forest sectors, he said.

So-called intermodal shipments are “under pressure” from the economy’s slowdown, he said. Intermodal includes international shipping containers and truck trailers hauled by rail. Yet Moorman hopes rising fuel prices will lead to even more being carried by trains, which are more fuel-efficient than trucks.

“Five dollar a gallon diesel fuel provides a powerful incentive to ship by rail,” he said.

Norfolk Southern also continues to see more of the containerized imports it carries coming through East Coast ports. Yet it still handles Eastern delivery for containers shipped to West Coast ports.

“Our goal is to be able to handle freight as efficiently and profitably as possible whether it’s entering our network from an East Coast port or a Midwestern gateway via the traditional transcontinental routing,” Moorman said. “We are strategically positioning our network to be coastally agnostic.”

The economy this year is turning out to be “a little softer” than Norfolk Southern had anticipated, Moorman said. Still, the country’s fourth-largest railroad expects to be able to raise its rates at least 4 percent this year, he said.

Additionally, Moorman said the railroad will be announcing an initiative called “Track 2012″ later this year. The effort will address safety, service and operating and financial performance. Track 2012 will provide a “road map and be a focal point for the company to improve over the next five years,” he said.

Gregory Richards, (757) 446-2599, gregory.richards@pilotonline.com

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Copyright (c) 2008, The Virginian-Pilot, Norfolk, Va.

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