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February 2011
by Julie Sneider, Assistant Editor
Five of North America's seven largest railroads plan to spend more — up to 25 percent more — on capital projects this year than they spent in 2010.
Class Is' capital budgets include ongoing investments in positive train control (PTC) programs, senior executives said during fourth-quarter 2010 earnings teleconferences/webcasts last month. This year's plans also call for infrastructure and technology upgrades, locomotive and freight-car acquisitions, and other projects designed to improve efficiency as railroads prepare for growth.
"The improving economy creates opportunities to capture growth more efficiently through infrastructure and technology investments," said Canadian Pacific's Chief Financial Officer Kathyrn McQuade in a prepared statement.
CP's 2011 capex budget will range between $950 million and $1 billion, a 25 percent increase compared with last year's $800 million. CP plans to set aside $680 million for basic track infrastructure renewal and about $40 million for PTC.
Norfolk Southern Railway has budgeted $146 million for PTC in 2011, on top of a baseline capex budget projected to rise 19 percent year over year to $1.74 billion. Union Pacific Railroad's 2011 capital budget of $3.2 billion represents a 23 percent increase compared with 2010's budget. The plan includes purchasing 100 new locomotives and completing select capacity projects.
Also projecting double-digit increases are CSX Corp. and BNSF Railway Co. The bulk of CSX's $2 billion budget for 2011 — an 11 percent increase compared with 2010 — "will maintain our infrastructure and invest in our rolling stock," CFO Oscar Munoz said during CSX's 4Q teleconference on Jan. 25.
Although BNSF had not publicly revealed 2011 capital plans as of press time, Chairman, President and CEO Matt Rose told the Wall Street Journal that he expects BNSF's 2011 capex to be up more than 20 percent vs. 2010's $2.6 billion.
Two Class Is — CN and Kansas City Southern — aren't planning double-digit spending increases. KCS' capex will remain at 17.5 percent of total revenue, as it did in 2010. But, KCS is anticipating low double-digit revenue growth in 2011.
CN's budgeted capex is $1.7 billion this year, the same as in 2010.
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