Norfolk Southern will be FedEx’s main eastern rail carrier

Norfolk Southern Corp has been selected as FedEx Corp's primary eastern rail carrier for its revamped freight shipping operation, reported Dow Jones Newswires.

FedEx said in September it would restructure its domestic trucking unit, combining its FedEx Freight and FedEx National less-than-truckload operations beginning January 30.

Norfolk Southern executives said on a post-earnings conference call that the company has been selected as FedEx's main eastern intermodal carrier for the revamped service, which they said will be rolled out on Monday.

"We see that as a first step with [FedEx], and we see it as a great opportunity," said Donald Seale, Norfolk Southern's chief marketing officer.

Seale, speaking on a post-earnings conference call with analysts, declined to discuss potential revenue or volume that could come from the FedEx deal, saying the details are confidential. He said Norfolk Southern won the business after a number of test intermodal shipments by FedEx.

FedEx didn't have an immediate comment on the Norfolk Southern announcement.

Railroads overall have been benefiting from increasing intermodal freight, in which shipments are carried on both trucks and trains en route to final destinations.

United Parcel Service (UPS) said Tuesday that it has used rail service for decades, with all of its ground service packages travelling 750 miles or more generally moving by train.

A UPS spokesman said the company spent more than US$750 million on intermodal rail service in the US last year. He said UPS uses all of the major railroads and doesn't have primary providers.
Norfolk Southern reported a 31 percent increase in fourth-quarter profit, although the results were boosted by a benefit related to deferred income taxes.