What Was The Extent Of The Impact Of The Decline In Oil Prices On Norfolk Southern’s Q1 Revenue?

-10.40%
Downside
256
Market
230
Trefis
NSC: Norfolk Southern logo
NSC
Norfolk Southern

Fuel surcharge revenue accounts for a significant portion of Norfolk Southern’s overall revenue. The company’s fuel surcharge revenue is tied to two-month lagged values of either U.S. On-Highway Diesel Prices or WTI Crude Oil prices. As a result of the decline in oil prices over the past twelve months and consequently highway diesel prices, the company’s fuel surcharge revenue declined from an estimated $163 million in Q1 2015 to around $49 million in Q1 2016, accounting for $114 million or roughly 78% of the year-over-year decline in the company’s top line, with the remaining decline attributable to the fall in shipment volumes offset by core pricing gains.

NSC Decline in Fuel Surcharge Revenue

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Norfolk Southern

 

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