Chief Marketing Officer at Norfolk Southern
Thank you, Cindy and good morning, everyone. Now beginning on Slide 13, I will highlight our results for the fourth quarter. Total revenue improved 11% year-over-year to $2.9 billion, as strong demand and favorable price conditions more than offset the 4% volume decline in the fourth quarter. Volume was impacted by the continuation of the extraordinary global supply chain disruptions and slower network velocity.
Pricing and strength across all markets contributed to the 15% increase in revenue per unit and we reached record revenue per unit less fuel across all of our markets. This demonstrates our ongoing commitment to execute our yield up strategy and drive value for both our customers and our shareholders.
Within merchandise, volume growth in the fourth quarter was led by our chemicals franchise, as rising economic activity drove demand for chemical products, particularly for crude oil and natural gas liquids. Gains in our metals business also contributed to growth, with volume in these markets up 6% year-over-year on sustained high demand from the strengthening manufacturing sector.
Partially offsetting merchandise growth was a decline in automotive shipments, which were down 9% year-over-year due to slower velocity coupled with strong comps in the fourth quarter of 2020, when the industry was boosted by pent-up demand. Merchandise revenue per unit increased 6% year-over-year, driving total revenue growth of 8% to $1.7 billion for the quarter.
Revenue per unit less fuel for this market reached a record level in the fourth quarter. We've demonstrated year-over-year growth in this metric for 26 of the last 27 quarters, which further demonstrates our ability to drive sustainable revenue growth.
Our intermodal franchise continue to face pressure from supply chain volatility, resulting in a volume decline of 7% year-over-year. Strong consumer demand and elevated imports stress these supply chains and exceeded drayage capacity and equipment availability.
This negatively affected both our domestic and our international markets. But despite these headwinds, we achieved record intermodal revenue in the quarter, up 14% year-over-year and that was driven by increased fuel revenue, storage revenue and price gains. Revenue per unit less fuel grew for the 20th consecutive quarter.
Now turning to coal. Revenue increased 21% year-over-year in the fourth quarter, which was driven by price gains and higher demand in a tightly supplied market. Coal revenue per unit reached near record levels and increased 16% year-over-year. Our export markets continued to benefit from high seaborne coal prices, which increased the competitiveness of US coals in the global market.
Shipments of domestic met and coke were particularly strong this quarter on higher demand to support steel production.
If you'll turn to Slide 14, full-year 2021 revenue grew 14% to $11.1 billion on 5% volume growth. All of our markets posted gains reflecting strong demand for our product coming out of the pandemic, tempered by supply chain pressures experienced throughout the year.
Revenue growth was strongest in our merchandise franchise where all lines of business but particularly metals and construction benefited from higher demand and favorable price conditions associated with the economic recovery.
Intermodal growth was driven by elevated consumer activity and tight truck capacity. Coal revenue increased on higher seaborne coal prices and growth in steel production activity.
We reached record levels of both revenue per unit and revenue per unit less fuel. Both metrics were up year-over-year due to price gains, storage charges and higher fuel revenue in the case of total revenue per unit. And as markets have evolved, we leveraged favorable conditions to drive improvement for our bottom line.
Now let's look ahead to our outlook for 2022 on Slide 15. We're optimistic that our business will continue to grow, despite the ongoing uncertainty in the economy. We are increasingly confident that supply chain conditions including rail network velocity will improve as the year progresses. Overall, the demand environment for our service is strong and we're committed to working with our customers and channel partners to develop sustainable solutions to maximize our opportunities ahead.
We remain focused on our ability to deliver value for our customers and leverage market conditions throughout 2022.
As Cindy explained, both our hiring plan and the development and implementation of Top SPG will deliver increased fluidity, efficiency and network capacity as the year progresses and our volume pattern will follow that same sequential improvement trend. This will allow our customers to provide additional value to their customers for their product and build a strong platform for future growth.
Market conditions for our merchandise franchise are expected to be favorable, with several customers announcing expansions in the new year that will create opportunities. In addition, industrial production is projected to grow 4% in 2022, which will drive demand for most of our markets, particularly for our steel markets.
Residential construction spending is forecasted to grow more than 6% this year, following the sharp increase in 2021, supporting continued gains in several of our industrial markets. US light vehicle production is expected to reach 10.3 million units this year, which is approaching pre-pandemic levels of 2019.
This recovery will have a positive impact on both our automotive and our metals volumes in 2022.
Demand for our intermodal markets is expected to remain favorable, despite continued headwinds associated with supply chain congestion, impacting our ability to capture new opportunities. These headwinds are expected to ease in the second half of the year, creating a more favorable environment for growth. And furthermore, a robust consumer economy, elongated inventory replenishment cycles and a tight truck market support our growth plan.
Durable goods consumption is expected to improve 3% and that's on top of the near record 19% growth in 2021. This also bodes well for our intermodal franchise.
Our outlook for coal is more guarded as some of the drivers of 2021 growth shows signs of easing in 2022 despite some potential opportunities in the near-term. Seaborne prices remain high, however, they have begun to decline, leaving subdued optimism going into the new year. Expected increases in global production will likely contribute downward pressure on these seaborne coal prices and lower the demand for export coal.
In the utility markets, while there has been strength associated with higher natural gas prices, that upside will be determined by coal supply as production levels remain tight.
Now before I turn it over to Mark, I would like to highlight our new insights portal on Slide 16. The pandemic has pushed manufacturers to redesign their supply chains in favor of certainty of supply and locating inventory closer to customers. Our best-in-class industrial development team is at the forefront of these efforts and they launched an innovative solution to drive value for our customers and support development in the communities that we serve.
Insights is a comprehensive search tool for rail served industrial sites and transload facilities on our network. It allows users to create customized search parameters to quickly identify industrial sites that meet their unique needs. And more importantly, this portal makes it easier to do business with NS and helps our customers make informed, long-term investment decisions that will promote economic activity and create jobs.
We're excited to provide this product to our customers and help them expand their business on Norfolk Southern. Overall, we are grateful for our strong customer partnerships and we look forward to growing our business in 2022, with a continued emphasis on improving our service and driving value for our customers and for our shareholders.
Now, I'll turn it over to Mark for an update on our financial results. Thank you.