Norfolk Southern Announces New Cost Cutting Initiatives As Part Of Goal In Saving $650 Million Annually By 2020

Norfolk Southern Cop. (NYSE: NSC) announced on Tuesday an update to its five-year strategic plan.

Norfolk said it plans on consolidating its three operating regions into two, as of March 15. The company noted that by doing so it can enhance operating efficiencies, reduce costs, drive profitability, and accelerate growth.

Under the new structure, Norfolk Southern's network will be divided into Northern and Southern regions only. The Northern Region will include the Harrisburg, Pittsburgh, Dearborn, Lake, and Illinois divisions while the Southern Region will include Piedmont, Alabama, Georgia, Central, and Pocahontas divisions.

Norfolk noted that its new initiative is part of a long-term plan to realize annual expense savings of $650 million by 2020.

"We are committed to aggressively controlling costs while delivering the high levels of superior service that our customers value," said Mike Wheeler, executive vice president and chief operating officer. "Consolidating our operating regions will generate productivity savings, not only through right-sizing, but also by leveraging advancements in train dispatch technologies that support more fluid and efficient movement of freight across the network. As we continue to execute on our five-year strategic plan, we are confident that these steps will make Norfolk Southern a faster, lower-cost, and more profitable railroad."

Shares of Norfolk were showing no trades early Wednesday morning and have lost more than 10 percent since the start of 2016.