Class Is' big capex spend still a trend in 2024

By Jeff Stagl, Managing Editor

Despite lingering economic, regulatory and political uncertainty in the rail industry, the Class Is aren’t holding back on capital spending in 2024.

In January, the large roads announced their capital expenditure (capex) plans for the year, and many of their budgets remain fairly robust.

BNSF Railway Co. has set a 2024 capex budget of $3.92 billion, just a slight drop from 2023’s $3.96 billion. The Class I is allocating $2.88 billion to maintain its core network, nearly $600 million for expansion and efficiency projects, and $400 million for equipment acquisitions.

“We continue to invest in our network to ensure we run our railroad as safely and efficiently as possible, while building upon the strong service our customers expect,” said BNSF President and CEO Katie Farmer in a press release.

Maintenance projects pegged in 2024 include replacing 365 miles of rail and about 2.8 million ties, and surfacing and/or undercutting nearly 13,000 miles of track.

Among this year’s expansion and efficiency projects, BNSF plans to complete two multiyear projects aimed at increasing capacity throughout its Southern Transcon corridor, including the addition of several segments of new track in eastern Kansas and terminal/fueling improvements near Belen, New Mexico.

The railroad also expects to continue multiyear intermodal facility expansion projects in Chicago, complete a multiyear track efficiency improvement project in San Bernardino, California, and continue property acquisitions and development activities for its $1.5 billion, master-planned Barstow International Gateway complex in Southern California.

Moreover, BNSF anticipates the opening of Logistics Center North Houston in Cleveland, Texas, in the fourth quarter. The Class I’s logistics centers are BNSF-owned industrial parks that offer direct rail service in underserved, yet attractive end-user markets, including Hudson, Colorado; Fontana, California; Oklahoma City, Oklahoma; and Sweetwater, Texas.

Recently, the first train departed from a private intermodal facility at Logistics Center Hudson in Colorado. The facility was developed through a collaboration between BNSF, U.S. Rail and Logistics and ConGlobal.

Earmarks for more rail, equipment

Meanwhile, Union Pacific Railroad has budgeted $3.4 billion for 2024 capex compared with $3.7 billion in 2023 and $3.4 billion in 2022. This year’s spending plan includes $1.9 billion for rail infrastructure replacement work, $600 million for locomotive modernizations and freight-car acquisitions, $600 million for capacity and commercial facilities, and $300 million for technology and security projects.

In terms of capacity, UP plans to pursue projects that expand its intermodal footprint, including work at new or expanded facilities in Southern California (the Lance M. Fritz Inland Empire Intermodal Terminal), Kansas City and Phoenix.

At CSX, the 2024 capex budget is pegged at about $2.5 billion versus $2.3 billion in 2023. Dollars will be devoted to capacity expansion, growth-related projects, equipment additions, ongoing improvements to former Pan Am Railways infrastructure, and a new Meridian and Bigbee Railroad interchange with Canadian Pacific Kansas City in Mississippi.

“We expect an increase in our capital spending as we invest in safety infrastructure, locomotive rebuilds, upgrades to our portion of the New Alabama Interchange with CPKC and other specific high-return investments, including technology investments,” said CSX President and CEO Joe Hinrichs during the Class I’s fourth-quarter earnings conference on Jan. 24.

Conversely, Norfolk Southern Railway announced its 2024 capex would be flat at $2.3 billion. In addition, its purchase of the Cincinnati Southern Railway from the city of Cincinnati for $1.65 billion would flow through capex.

For CN — which didn’t divulge any details about its capex plan — the 2024 budget is CA$3.5 billion compared with CA$3.1 billion in 2023. Canadian Pacific Kansas City’s budget this year is CA$2.75 billion.

Email questions or comments to jeff.stagl@tradepress.com.