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Norfolk Southern: Rail Labor Shortage Crisis Will Continue To Hamper Profit Margins

Summary

  • The labor shortage among railroad workers presents a significant bottleneck in the broader supply-chain crunch since 2020.
  • Railroad strike efforts in 2022 and the recent Ohio derailment disaster have further strained labor satisfaction deficits in the industry and are likely increasing attrition.
  • Most rail employees are near retirement age, with very few trainees under 30 years old, meaning the labor shortage could grow over a prolonged period without substantial improvement.
  • Norfolk Southern’s sales may decline in 2023 as the manufacturing PMI signals a more significant contraction in US rail traffic.
  • Over the coming years, I suspect Norfolk’s margins may decline by 5-10% as the company grapples with rising costs and stagnating revenue.

 

Virginian Heritage unit from Norfolk Southern leads M6M through Vesuvius Virginia

Wirestock/iStock Editorial via Getty Images

 

The railroad industry has been in the headlines over the past year for various reasons. For one, the industry has been caught in increasing labor and union challenges, slowly forcing railway companies to increase worker

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