Freight railroad Norfolk Southern Corp. said Wednesday that its third-quarter income jumped 24 percent as higher rates trumped modest growth in shipping volume.
Its shares rose in after-hours trading.
Company executives were upbeat about the prospects for slow but steady growth in many industries that depend on railroads. Executive vice president Donald Seale said the company saw signs that international trade will be strong enough to boost demand for shipping coal, manufactured goods, grain and other products.
Norfolk Southern's third-quarter results showed that the company charged higher rates for carrying coal, chemicals and metals than it did a year ago.
The Virginia-based company said net income was $554 million, or $1.59 per share, compared with $445 million, or $1.19 per share, a year earlier.
Revenue rose 18 percent, to $2.89 billion.
Analysts expected earnings of $1.41 per share on revenue of $2.87 billion, according to FactSet.
Norfolk Southern shares rose 39 cents to close at $69.77. After the third-quarter results were released, the shares jumped $3.13, or 4.5 percent, to $72.90 in after-hours trading.
Railroads have been raising prices and fuel surcharges to boost revenue despite flat volume. That's helped them cope with higher fuel prices.
Norfolk Southern executives said high turnover among truck drivers was creating an opportunity for railroads to take more of the freight-hauling market.
Last week Union Pacific Corp. said third-quarter net income climbed 16 percent and CSX Corp. reported a 12 percent gain, even though shipping volume at both railroads inched higher by just 1 percent.
Norfolk Southern continued the pattern of strong earnings growth despite lukewarm traffic. Carloads increased 3.3 percent, but rates _ on a dollar-per-carload basis _ jumped 13.9 percent.
The results from the big freight railroads suggest that the economy is sluggish but hasn't gone into reverse. And they have been able to push through rate increases on shippers despite the economic jitters.
Higher rates have helped Norfolk Southern push revenue higher by between 14 and 19 percent in each of the last five quarters.