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For the most part, Norfolk Southern Corp. has avoided the service woes experienced throughout the year by some of its Class I counterparts. That's enabled NS to contain expenses and register financial gains in the second quarter, including an 11 percent operating revenue hike to a record $1.8 billion.

Today, the Class I reported quarterly net income of $213 million, a 55 percent increase compared with second-quarter 2003's $137 million. NS' quarterly operating ratio improved 5 points to 76.6 and operating expenses rose only 4 percent — despite higher fuel costs — to $1.39 billion.

"[Our] strong second-quarter results were driven by increased business volumes, effective expense controls and operating execution that is allowing us to deliver a higher quality, higher value service," said NS Chairman, President and Chief Executive Officer David Goode in a prepared statement. "We continue to add train and engine crews, and they … are helping Norfolk Southern handle the strongest business growth we have seen in years."

During the year's first six months, NS increased income from continuing operations 67 percent to $371 million, operating revenue 9.8 percent to $3.5 billion (a six-month record) and net income 7 percent to $371 million compared with similar 2003 data. NS' operating ratio improved 5 points to 78.

Six-month operating expenses rose 3 percent to $2.7 billion compared with the same 2003 period, primarily because of higher compensation and benefits, and fuel costs.

"As we move into the remainder of the year, I am confident [we] can continue to leverage our operational momentum, again improve service quality, and energetically pursue new business and margin improvement," said Goode.