VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Friday, January 2, 2026
Norfolk Southern Corporation
NSC · New York Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
Norfolk Southern is a U.S. Class I freight railroad operating about 19,200 route miles across 22 states and the District of Columbia. FY2024 railway operating revenue mix was merchandise (62%), intermodal (25%), and coal (13%). Its moat is driven by dense legacy rights-of-way and a high fixed-cost network that is difficult to replicate, tempered by strong modal competition, regulation, and safety/service execution risk.
Primary segment
Merchandise
Market structure
Oligopoly
Market share
—
HHI: —
Coverage
3 segments · 7 tags
Updated 2026-01-02
Segments
Merchandise
Eastern U.S. freight rail transportation for industrial & consumer goods
Revenue
62%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Intermodal
Eastern U.S. rail intermodal transportation
Revenue
25%
Structure
Oligopoly
Pricing
weak
Share
—
Peers
Coal
Rail transportation of coal (utility, export, metallurgical, and industrial)
Revenue
13%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Moat Claims
Merchandise
Eastern U.S. freight rail transportation for industrial & consumer goods
FY2024 mix: merchandise carloads accounted for 62% of total railway operating revenues; merchandise includes agriculture/forest/consumer, chemicals, metals & construction, and automotive (NSC FY2024 Form 10-K, filed 2025-02-10).
Physical Network Density
Supply
Physical Network Density
Strength
Durability
Confidence
Evidence
Dense, integrated rail network reaches thousands of rail-served facilities; replicating comparable coverage is prohibitively difficult.
Erosion risks
- Network disruptions from accidents or severe weather
- Regulatory mandates increasing operating cost
- Service deterioration can push freight to truck/barge
Leading indicators
- Customer service metrics (on-time performance)
- Network velocity / dwell metrics
- Railway operating ratio trend
Counterarguments
- Interchange dependence limits end-to-end service control for some lanes
- Many shipments can switch to trucking when service reliability falls
Permits Rights Of Way
Legal
Permits Rights Of Way
Strength
Durability
Confidence
Evidence
Legacy rights-of-way and corridor access are scarce; new long-haul rail ROW is hard to permit and assemble.
Erosion risks
- Mandated access/reciprocal switching rules could weaken corridor exclusivity
- Political push for tighter safety regulation
Leading indicators
- STB rulemakings and decisions affecting access/pricing
- State/federal infrastructure and permitting policy changes
Counterarguments
- Public investment in highways/waterways can erode rail's relative advantage
Scale Economies Unit Cost
Supply
Scale Economies Unit Cost
Strength
Durability
Confidence
Evidence
High fixed-cost rail infrastructure creates strong operating leverage; incumbents can spread costs over large volume base.
Erosion risks
- Cost inflation (labor, fuel, materials) outpaces pricing
- Volume declines reduce fixed-cost absorption
Leading indicators
- Carload and revenue ton-mile trends
- Unit cost per GTM / RTM
Counterarguments
- High fixed cost becomes a disadvantage in downturns versus asset-light trucking
Intermodal
Eastern U.S. rail intermodal transportation
FY2024 mix: intermodal was 25% of total railway operating revenues and handled 4.1M units; customers include intermodal marketing companies and international steamship lines (NSC FY2024 Form 10-K, filed 2025-02-10).
Physical Network Density
Supply
Physical Network Density
Strength
Durability
Confidence
Evidence
Large terminal + corridor footprint in the East supports competitive service offerings and network optionality for domestic/international intermodal.
Erosion risks
- Port routing shifts change lane economics
- Terminal congestion reduces service quality
- Truck productivity gains (e.g., automation) narrow rail economics
Leading indicators
- Intermodal units and revenue per unit
- Share of volume tied to international vs domestic
- Terminal dwell / container velocity
Counterarguments
- IMCs can multi-source across rails and truckload providers
- Trucking offers faster point-to-point transit on many lanes
Permits Rights Of Way
Legal
Permits Rights Of Way
Strength
Durability
Confidence
Evidence
Rail ROW and terminal siting are hard to replicate in dense metro corridors; incumbents benefit from historic corridor access.
Erosion risks
- Community opposition to terminal expansion
- Regulatory changes affecting access (reciprocal switching)
Leading indicators
- Permitting timelines for terminal/corridor projects
- STB proceedings affecting competitive access
Counterarguments
- Intermodal growth can be served by existing competing rail corridors via interchange
Scale Economies Unit Cost
Supply
Scale Economies Unit Cost
Strength
Durability
Confidence
Evidence
Long-haul intermodal can benefit from rail's low variable cost per ton-mile at scale; incumbents can leverage existing infrastructure.
Erosion risks
- Higher labor costs reduce unit-cost advantage
- Underutilization if volumes shift to trucking
Leading indicators
- Intermodal load factor / train length
- Operating ratio by quarter
Counterarguments
- Asset-heavy model can underperform when pricing is set by truck spot markets
Coal
Rail transportation of coal (utility, export, metallurgical, and industrial)
FY2024 mix: coal was 13% of total railway operating revenues; handled 76.7M tons and directly served 18 coal-fired power plants plus multiple river/port terminals (NSC FY2024 Form 10-K, filed 2025-02-10).
Physical Network Density
Supply
Physical Network Density
Strength
Durability
Confidence
Evidence
Network access to eastern coal basins and export/river facilities is difficult to replicate and supports captive/corridor coal flows.
Erosion risks
- Coal plant retirements and decarbonization policies
- Export market volatility
- Mine closures reduce origin density
Leading indicators
- Coal tons and revenue trend
- Met coal export price/volume
- Utility coal burn and plant retirement announcements
Counterarguments
- Some coal flows can shift to alternate railroads or barge depending on geography
- Underlying end-market demand is shrinking in many regions
Switching Costs General
Demand
Switching Costs General
Strength
Durability
Confidence
Evidence
Coal supply chains are often designed around specific mine-to-plant/terminal rail corridors; changing carrier can be constrained by infrastructure and contractual arrangements.
Erosion risks
- Customers renegotiate volumes aggressively in declining market
- Fuel switching to natural gas/renewables
Leading indicators
- Contracted vs spot coal volume mix
- Plant-level sourcing changes
Counterarguments
- Coal shippers may reduce volumes rather than pay higher rates
- Where plants/terminals have multi-rail access, switching costs are limited
Permits Rights Of Way
Legal
Permits Rights Of Way
Strength
Durability
Confidence
Evidence
Long-lived rights-of-way and access to constrained terminal corridors are difficult to reproduce; this protects incumbents in coal corridors (even as demand may decline).
Erosion risks
- Regulatory actions affecting corridor access or rates
- Terminal/port policy changes
Leading indicators
- Port/terminal capacity expansions by competitors
- STB policy and merger outcomes affecting competition
Counterarguments
- Rights-of-way do not prevent demand erosion from energy transition
Evidence
At December 31, 2024, we operated approximately 19,200 route miles in 22 states and the District of Columbia.
Network scale supports route optionality and dense origin/destination coverage.
trucks and barges have been able to use public rights-of-way maintained by public entities.
Highlights rail's privately maintained ROW vs competing modes' access to public ROW.
Our railroad infrastructure makes us capital intensive with net properties of approximately $36 billion.
Illustrates the scale of sunk capital that deters entry and supports cost spreading.
We offer the most extensive intermodal network in the eastern half of the U.S.
Direct management claim supporting intermodal network scale advantage.
We operated approximately 19,200 route miles in 22 states and the District of Columbia.
Scale of controlled corridors implies substantial ROW footprint.
Showing 5 of 8 sources.
Risks & Indicators
Erosion risks
- Network disruptions from accidents or severe weather
- Regulatory mandates increasing operating cost
- Service deterioration can push freight to truck/barge
- Mandated access/reciprocal switching rules could weaken corridor exclusivity
- Political push for tighter safety regulation
- Cost inflation (labor, fuel, materials) outpaces pricing
Leading indicators
- Customer service metrics (on-time performance)
- Network velocity / dwell metrics
- Railway operating ratio trend
- STB rulemakings and decisions affecting access/pricing
- State/federal infrastructure and permitting policy changes
- Carload and revenue ton-mile trends
Curation & Accuracy
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