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12/2/2004



Rail News: Rail Industry Trends

Capital spending: NS to increase 2005 budget about 16 percent to $938 million



Norfolk Southern Corp. plans to spend more on capital improvements next year — a lot more. Today, the Class I announced its 2005 capital improvement budget will be $938 million, a nearly 16 percent increase compared with the $810 million 2004 budget. The railroad previously budgeted $798 million in 2003, $705 million in 2002 and $806 million in 2001.

The 2005 budget includes $671 million for roadway projects and
$225 million for equipment purchases.

Projected roadway spending includes $438 million for rail, tie, ballast and bridge programs; $23 million for communications, signal and electrical projects; $22 million for maintenance-of-way equipment; and $14 million for environmental projects and public improvements, such as grade crossing
separations and signal upgrades.

The equipment budget includes $154 million to purchase 52 six-axle
locomotives, upgrade existing power units, certify and rebuild 300
multi-level automobile racks, and purchase 317 bi-level racks after leases expire. The budget also includes $44 million for computer systems and information technology projects.

In addition, NS plans to spend $107 million on business development initiatives, such as increasing track capacity and access to coal receivers, building bulk transfer, and vehicle production and distribution facilities, and expanding intermodal network capacity.

"Our planned 2005 capital spending budget will help the company improve
service levels and handle business growth by increasing capacity,
improving efficiency and ensuring safety," said NS Chairman and Chief Executive Officer David Goode in a prepared statement.


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