Norfolk Southern Corp. (NSC) Chief Executive Wick Moorman said Wednesday the steep slide in railroad freight volumes eventually will bottom, if only because manufacturers will be forced to replenish depleted inventories.

"We are seeing so much inventory pull-down that at some time we will have to see a recovery in volume," Moorman said. "Hopefully, it will mark a bottom and then we'll see a little resurgence."

Moorman, speaking in an interview, voiced optimism that the anticipated federal stimulus package also will help boost freight volumes in the coming months by spurring more economic activity.

Still, he said, Norfolk Southern's freight volume is likely to be down in 2009. Volume was off 3% overall last year for the railroad, which largely operates along the East Coast, but the trend accelerated to an 8% slide in the fourth quarter.

"Barring something happening to this economy that we don't see right now, we certainly anticipate that [volume] will be down" again in 2009, he said, although he declined to predict by how much.

Like other railroad operators, however, Norfolk Southern has had success pushing through price increases despite the slumping economy. The increases have helped railroads offset their sliding freight volumes and remain profitable.

Norfolk Southern raised its core rail prices, which don't include fuel surcharges, by an average 7% last year. Moorman said core prices will go up this year as well, albeit by less than the 2008 average.

"It's a fair assumption [the increase] won't be as high as in 2008, and that certainly reflects the economic times," he said.

Shares of Norfolk Southern were recently up 4.9%, or $1.85, at $39.50.

Union Pacific Corp. (UNP), Burlington Northern Santa Fe Corp. (BNI) and CSX Corp. (CSX) also have said their core prices will be going up again in 2009, continuing a trend of raising rail prices over the last few years.

The trend has fueled something of a backlash, prompting some railroad customers to push for the new Congress to reinstate tighter industry regulations. Railroads contend they need to invest in repairs and improvements, and they also argue that rail prices remain cheaper than those of trucks and, adjusted for inflation, are lower than when Congress deregulated the industry 28 years ago.

"This whole idea of changing the regulatory balance...is one that causes us a great deal of concern," Moorman said Wednesday.

He added that he's optimistic the effort won't be successful because "there are a lot of people in Washington who understand that a healthy rail industry is important" for the nation.

Late Tuesday, Norfolk Southern posted a 13% increase in fourth-quarter net income, as growth in coal-shipping revenue offset smaller losses in its intermodal and general merchandise segments.

The company reported net income of $452 million, or $1.21 a share, up from $399 million, or $1.02 a share, a year ago. Revenue rose 2% to $2.5 billion.

Analysts polled by Thomson Reuters had projected per-share earnings of $1.18 on revenue of $2.6 billion.

-By Bob Sechler, Dow Jones Newswires; 512-394-0285; bob.sechler@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary. You can use this link on the day this article is published and the following day.