Norfolk Southern to Cut Back Triple Crown Unit, Reduce Costs

Luke Sharrett/Bloomberg News

Norfolk Southern Corp. announced it would restructure its truck/rail business known as Triple Crown Services, or TCS, and cut costs by moving to convert most of that unit’s intermodal freight to container equipment.

The move, which will cut about 200 jobs, will retain movement of auto parts in specialized truck equipment known as RoadRailers for service between Detroit and Kansas City.

The RoadRailer equipment, which is designed to facilitate quick transfers between truck and rail service, doesn’t require using lift equipment, which is needed for all other intermodal shipments.

RoadRailers have been used in a variety of rail freight services for more than three decades, but only by Norfolk Southern in recent years.

The company, which is the third-largest rail intermodal provider, said in a statement that it “will work with shippers and logistics partners” to move their freight into containers that are the carrier’s predominant equipment for truck/rail service.

Norfolk Southern, based in Norfolk, Virginia, said the move would increase earnings next year, without specifying by how much. The amount of cost savings also wasn’t specified.

“This change is a natural evolution in the business,” said Alan Shaw, Norfolk Southern chief marketing officer. “We want to retain the best of TCS in specific markets, with efficient door-to-door logistics.”

After the transition, Triple Crown, which currently has 240 employees, will be shrunk to about 40.

The Indiana-based TCS service at the time of the announcement was offered to 13 cities, including Detroit and Kansas City from a hub operation in Fort Wayne.

The railroad’s Sept. 18 statement said the RoadRailer for auto parts will continue “for the foreseeable future.” Transit times for those services will be continued. The spokesman said it is too early to tell how other customers’ freight will be affected by the restructuring.

A railroad spokesman said the peak season shipments through mid-November using the TCS service will be continued so that service to customers won’t be disrupted. After that, the changeover will be gradual, he said, without specifying the time period.

Revenue from Triple Crown now is about $350 million annually, or about 13% of the company’s truck/rail revenue of $2.56 billion last year. The statement didn’t say how much of that revenue was affected by the transition.

Workers who lose their jobs will be eligible for severance pay, job placement assistance, and can apply for other jobs at Norfolk Southern, the statement said.

James Newton, TCS president said in the statement that “we are proud of the accomplishments of Triple Crown and the service we have provided to our customers, and we are confident that TCS and Norfolk Southern will continue to provide the level of service our customers expect.”

NS also said it would have depreciation-related costs of $65 million in the second half of 2015 as a result of the changeover.


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