Railroad Earnings Rise as More Cargo Moves From Trucks to Trains

By Connor Hart

Union Pacific and Norfolk Southern both reported higher profit and revenue in the recent quarter, as more shippers continue to move their cargo from truck to rail.

Demand for rail service increased throughout the third quarter, Norfolk Southern Chief Executive Mark George said Thursday, adding "a tighter trucking market highlighted rail's competitive advantages and underscored the opportunity for a more efficient, capacity-enhanced freight network."

Union Pacific and Norfolk Southern are working to combine their networks, having announced a $71.5 billion merger last year to create the first transcontinental freight railroad in the U.S.

The companies provided additional information regarding the proposed deal to the Surface Transportation Board in July, adding commitments to ensure the tie-up provides faster, more reliable service as promised. The merger has faced resistance from federal regulators, customers and rivals who argue it would drive up freight prices and dampen competition.

Union Pacific Chief Executive Jim Vena said the companies continue work toward closing the deal, which is expected to close in mid-2027. It comes as a drop in the number of truck drivers in the U.S. and sharply higher fuel costs has pushed up the cost of moving cargo on U.S. roads.

The result: Many shippers are now more compelled to move some of their goods to less-pricey rail options.

Union Pacific reported 6% volume growth in the recent quarter, while Norfolk Southern said volumes climbed 3% from last year. Both companies benefited from fuel surcharges, which allow the freight companies to pass on higher fuel costs to their customers.

Union Pacific said total operating revenues climbed 15% to $7.2 billion in the recent quarter, topping Wall Street models for $7.16 billion. Norfolk Southern, meanwhile, said revenue climbed 14% to $3.5 billion, roughly in line with analyst views.

For its three months ended Sept. 30, Union Pacific reported a profit of $2.08 billion, or $3.49 a share, up from $1.79 billion, or $3.01 a share, a year earlier. On an adjusted basis, quarterly earnings of $3.53 a share came in ahead of analyst estimates for $3.47 a share.

Looking ahead, the company said it continues to expect per-share earnings growth in the high-single-digit range for the year.

Meanwhile, Norfolk Southern said third-quarter income from railway operations rose 4.7% to $1.15 billion. Quarterly earnings came in at $3.37 a share, or $3.62 a share when stripping out one-time expenses. Analysts were looking for adjusted earnings of $3.46 a share.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

October 22, 2026 09:02 ET (13:02 GMT)