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Rail News: Financials

NS boosts capital spending by 12 percent for 2012

During its fourth-quarter earnings conference yesterday, Norfolk Southern Corp. announced it has budgeted $2.4 billion for capital spending in 2012, up 12 percent compared with 2011’s $2.16 billion budget. Replacement and core spending will total about $1.6 billion, or 67 percent of the total budget, said Executive Vice President and Chief Information Officer Deborah Butler.

NS plans to spend $840 million on roadway projects, including rail, tie and ballast programs, and bridge and culvert replacements. The budget also allocates $322 million for facilities and terminals, such as mechanical shops, industrial products facilities and intermodal terminals along NS’ Crescent Corridor intermodal route between New Jersey and Louisiana. The railroad plans to complete three Crescent Corridor terminals this year in Alabama, Pennsylvania, and Tennessee. The facilities/terminals budget also will help fund a multi-year initiative to expand and update NS’ locomotive servicing facility, said Butler.

In terms of rolling stock, the Class I has budgeted $212 million for locomotives, including alternative power units, rebuilds and upgrades, and emission kits. NS plans to purchase 35 new locomotives this year, said Butler. The railroad also has budgeted $346 million for freight cars, including new and re-bodied coal cars, intermodal containers and chassis, and merchandise cars. Coal car replacements will be a big driver of the capex budget for the next couple of years, said Butler.

“We're continuing a multi-year investment in new coal cars as our existing fleet ages out,” she said. “And in addition, we're ramping up the coal car re-body program in 2012.”

The 2012 capex budget also includes $134 million for infrastructure projects, such as network improvements for coal and merchandise traffic, and public/private partnership projects associated with the Crescent Corridor and Chicago Region Environmental and Transportation Efficiency Program.

“Our infrastructure investments are specifically designed to relieve congested lines and improve capacity and velocity on Atlanta roads,” said Butler. “New projects for 2012 will focus on the Birmingham-Atlanta corner and our north-south line between Chattanooga and Cincinnati.”

Other budget items include $197 million for other miscellaneous projects, $92 million for technology and $247 million for ongoing positive train control (PTC) work. PTC spending is up from $146 million in 2011 and “in line with our plans to ramp up spending as the 2015 deadline approaches,” said Butler.

“Funding will be used to upgrade communication and signals, to purchase and install onboard network devices on locomotives and to continue the complex process of integrating PTC with our other operating systems,” she said. “Even with recent changes in the regulations, we still anticipate the total spending on PTC will exceed $1 billion.”

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More News from 1/25/2012