CEO: Norfolk is ready for fall demand

Norfolk Southern Corp. indicated uncertainty on Friday about whether it can meet heightened demand for its rail services in coming years, though said it is "well positioned" to handle peak loads this fall.

"While Norfolk Southern expects to be in a position to handle the demand for our rail services during the 2007 Fall Peak, whether the supply can meet the widely-anticipated growth in demand for rail transportation in the future is an open question," Charles Moorman, chairman and chief executive, wrote in a letter to the Surface Transportation Board presented in a Securities and Exchange Commission 8-K filing.

Fall Peak refers to the peak shipping season every autumn.

Moorman cited concerns about legislative proposals to regulate cargo rates and hazardous material shipments could, which may affect profitability and capacity for transporting various goods. Other factors -- from raw materials costs to the state of the economy -- will also affect profitability and demand.

Moorman said the company expects greater volume in corn, ethanol and chemical shipments through the rest of 2007, but "modest" growth in intermodal freight volume -- where truckers haul freight between air, rail and sea transportation -- and lower auto and housing-related shipments.

Norfolk Southern has spent $6.1 billion on infrastructure expansion programs to meet heightened demand between 2000 and 2006, with another $1.4 billion budgeted this year. However, these projects must provide a continuous return on investment to justify the spending, Moorman said.

This fall, however, the company will be on solid footing, according to Moorman.

"Given our expected volumes, improved capacity, additional locomotives, and the level of employment, ... Norfolk Southern is well positioned to handle any incremental volumes that may materialize as a result of the Fall Peak," he said.