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So, how did Norfolk Southern Corp.’s financial performance stack up in the third quarter? Pretty well, since the Class I maintained momentum generated by 2010’s first two quarters, said Chairman, President and Chief Executive Officer Wick Moorman during yesterday afternoon’s earnings webcast and teleconference.

Diluted earnings per share and net income both jumped 47 percent to $1.19 and $445 million, respectively; income from railway operations ballooned 33 percent to $746 million; railway operating revenue rose 19 percent to $2.5 billion; traffic increased 15 percent to 1.75 million units; and NS’ operating ratio improved 3.2 points to 69.6 compared with third-quarter 2009 figures. The ratio narrowly missed a record set in 2008, but the Class I did set a nine-month operating ratio record at 71.9 for the January-to-September period.

NS now has registered sequential revenue and traffic growth for the fifth consecutive quarter, said Moorman.

“We continue to see an economy characterized by slow growth, but growth nonetheless,” he said. “We remain confident that our focus on strengthening service, controlling costs, and investing in our rail infrastructure and equipment will drive long-term shareholder value.”

General merchandise revenue rose 16 percent to $1.3 billion and volume increased 11 percent to 587,678 units; coal revenue jumped 24 percent to $709 million and volume went up 15 percent to 402,743 units; and intermodal revenue increased 19 percent to $464 million and volume also rose 19 percent to 762,257 units. During the quarter, chemical and intermodal traffic at one point hit 52-week highs.

Automotive was the only traffic segment to post a decline (1 percent), primarily because of tougher comparisons associated with a Ford vehicle network redesign, said Executive Vice President and Chief Marketing Officer Don Seale. However, a recently expanded BMW plant in Spartanburg, S.C., should begin to increase vehicle traffic in early 2011, while a new Volkswagen plant in Chattanooga, Tenn., should begin to ship vehicles in second-quarter 2011, he said.

Meanwhile, third-quarter railway operating expenses increased 14 percent to $1.7 billion. Compensation/benefit costs rose 14 percent to $680 million as total headcount increased 2 percent and train and engine-service ranks grew 3.2 percent. Fuel costs soared 35 percent to $259 million.

In terms of a full-year projection, NS’ capital expenditures in 2010 should total about $1.5 billion, said Moorman. Although a 2011 capex budget hasn’t yet been set, spending will likely increase next year because NS plans to acquire new locomotives, continue to work on positive train control and SAP computer software implementation, and reinvest in the coal-car fleet, he said.

— Jeff Stagl