Ohio derailment a ‘PR nightmare’ for Norfolk Southern and the rail industry

by user


The derailment of a train carrying hazardous materials on the outskirts of East Palestine, Ohio, is a public-relations nightmare for carrier Norfolk Southern Corp. and for the rail industry, Cowen analyst Jason Seidl said Friday.

No one was killed or injured in the Feb. 3 derailment of 38 cars that that sent flames and black smoke into the sky and sparked an evacuation of the area. The derailed cars included 11 tank cars carrying hazardous materials that subsequently ignited, fueling fires that damaged an additional 12 railcars, according to the National Transportation Safety Board. On Feb. 5, responders began venting vinyl chloride from five cars and conducted a controlled burn of the chemical. 

Local residents are seeking answers to their questions about the health effects of the toxic chemicals that were spilled or burned off.

“Clearly this tragic derailment has been a PR nightmare for both [Norfolk Southern] and the rail industry,” Seidl said in a note released Friday. “Unfortunately, this obfuscates the broader industry trend of improved safety.”

Citing Federal Railroad Administration data, Seidl said that Norfolk Southern
NSC,
+0.64%

recorded the lowest average number of rail equipment accidents over the most recent 10-year period, compared with the three other U.S. railroad carriers designated as Class I: CSX Corp.
CSX,
+0.47%
,
Union Pacific Corp.
UNP,
+10.05%

and privately held BNSF.

Also read: Norfolk Southern is in the spotlight after Ohio derailment disaster. What does it mean for the carrier’s stock?

A Class I carrier is defined as any carrier earning annual revenue greater than $943.9 million, according to the U.S. government’s Surface Transportation Board.

Also citing FRA data, Cowen said that aggregate Class I rail equipment accidents are trending downward, from just under 2,000 in 2018 to just over 1,500 in 2022.

Cowen rates Norfolk Southern and Union Pacific as outperform and CSX as market perform.

Norfolk Southern’s stock has fallen 11% since the Ohio derailment, while CSX’s stock is down 4.1% and Union Pacific’s is up 1%. The S&P 500
SPX,
+0.56%

is down 3.5% over the same period.

Last week the National Transportation Safety Board issued its preliminary report on the accident, indicating that the train crew did not receive a critical warning on an overheated axle until just before the derailment.

Related: Norfolk Southern donates $1.1 million to East Palestine as locals turn to GoFundMe following train derailment

The Ohio village has remained in the national spotlight since the accident. Former President Donald Trump and current Transportation Secretary Pete Buttigieg are among whose who have visited East Palestine.

It’s safe for evacuated residents to return to the area, according to state and federal officials, who cite the results of air testing in the town and inside hundreds of homes. Testing of samples from East Palestine’s municipal well shows no water-quality concerns, according to the Ohio Environmental Protection Agency.

The Ohio EPA is also overseeing soil testing at the derailment site to ensure that all the contaminated soil is collected, removed and properly disposed of. An estimated 4,832 cubic yards of soil have been excavated from the ground surrounding the derailment site, the office of Ohio Gov. Mike DeWine said in a statement Friday. “Once removed from the ground, the soils are temporarily contained in piles that are placed on, and covered with, industrial-strength liners,” the statement said.  “Of the total amount of excavated soil, approximately six truckloads have been hauled away en route to a hazardous waste disposal facility in Michigan.”



Source link

Related Posts

Leave a Review

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy