Businessmodel of Norfolk Southern

Customer Segments

Norfolk Southern has a mass market business model, with no significant differentiation between customer groups. The company targets its offerings at firms of all industries and sizes. That said, most of its customers are in the coal, metals & construction, agriculture, chemicals, automotive, and paper/clay/forest sectors.

Value Proposition

Norfolk Southern offers three primary value propositions: innovation, risk reduction, and brand/status.

The company embraces innovation as part of its culture. Its groundbreaking efforts include:

• Building the NS 999, a first-of-its-kind battery-powered switch locomotive
• Creating the “virtual” ethanol inventory system, a software program that tracks the amount of ethanol pumped and shipped for each customer; it is the first of its kind among Class 1 railroads

• Developing a container door tool that can close the doors of intermodal containers when employees are standing on the ground; it has helped keep freight moving and prevented injuries for employees mounting and dismounting rail equipment The company reduces risk by maintaining high safety standards, as follows:

• It conducts behavior-based safety training for employees, which emphasizes using positive reinforcement in supporting safe workplace habits and continued safety process improvements
• It participates in Operation Lifesaver, a national organization focused on eliminating trespasser incidents and highway-rail grade crossing crashes
• It operates the “Protect the Line” reporting program, which makes it easier for rail fans, businesses, and communities to report issues to the police
• It offers a mobile app for the “Protect the Line” program which also enables reporting The company has established a strong brand due to its success. It operates 20,000 route miles in 22 states and the District of Columbia. It provides service to every major Eastern seaport, 10 river ports, and nine lake ports, and operates the most extensive intermodal network in the East. It transports overseas freight through numerous Atlantic and Gulf Coast ports. Lastly, it has won a number of honors, including recognition as a top Military-Friendly Employer by Victory Media and the E.H. Harriman Award, which recognized railroads with low casualty rates, for 24 years in a row.

Channels

Norfolk Southern’s main channel is its direct sales team. The company promotes its offering through its website, social media pages, and participation in conferences.

Customer Relationships

Norfolk Southern’s customer relationship is primarily of a personal assistance nature. The company helps its customers transport their goods while having limited interactions with them. It also operates the Norfolk Southern Training Center, which is an Accredited Testing Facility (ATF) for the American Welding Society.

The center administers testing programs for procedure qualification and maintenance renewal for welding codes; they are available to customers and the public.

Key Activities

Norfolk Southern’s business model entails developing and delivering its services for customers.

Key Partners

Norfolk Southern’s key partners are the suppliers that provide it with the equipment, material, and services it needs to run its railroad operations. It also maintains public-private partnerships with various government entities through which it has completed major projects.

These include partnering with 13 states to build the Crescent Corridor, a 2,500-mile rail infrastructure from the Gulf Coast to the East Coast; and participating in the Chicago Region Environment And Transportation Efficiency Program (CREATE), a partnership to add freight and passenger capacity and reduce congestion in the metropolitan Chicago area.

Key Resources

Norfolk Southern’s main resources are its physical resources, which include its 4,353 owned and leased locomotives, its 76,641 owned and leased freight cars, and its 64 automotive facilities.

Its Juniata locomotive shop is the largest locomotive repair facility in North America. It also maintains important human resources in the form of the employees that manage its railroad operations.

Cost Structure

Norfolk Southern has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is compensation/benefits, a variable expense. Other major drivers are in the areas of purchased services/rents and fuel.

Revenue Streams

Norfolk Southern has one revenue stream: revenues it generates from fees paid by clients for the transportation of their raw materials, intermediate products, and finished goods.