KCS 2016 capital program reflects 10 percent reduction over 2015

Written by Mischa Wanek-Libman, editor
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Kansas City Southern estimates its 2016 capital program will be between $580-590 million, which represents an approximate 10 percent decline from its $649 million program in 2015.

 

Maintenance commands 45 percent of the program, followed by growth investments at 42 percent, Positive Train Control at nine percent, which is the loan area to see increased spending, and IT/Other at four percent.

The railroad said that while capital spending had been reduced, investments for future growth in capacity and equipment are still planned. KCS will continue its three-year, more than $60 million expansion of Sanchez Yard in Nuevo Laredo, Mexico. The first phase of the project was completed in 2015. KCS Chief Executive Officer David Starling and President Patrick Ottensmeyer wrote in their “State of the Railroad” letter at the beginning of the month that the second phase of the project remains on target for 2016 with the opening of new classification tracks and improved mechanical repair space.

Out of its planned expenditures on growth, 11 percent will be dedicated to the Sasol storage in transit (SIT) rail yard. KCS entered into a long-term lease agreement with Sasol Chemicals for the SIT yard for Sasol’s new ethane cracker and derivatives project in Lake Charles, La.

Additional projects that will see movement this year include new or expanded sidings to improve line of road fluidity, the APMT Container Terminal at Lázaro Cárdenas, Mexico, which should open mid-2016 and rail access to a BMW plant being built in San Luis Potosi, Mexico.

During a fourth-quarter and year-end earnings call, Starling said, “Though our industry still must contend with economic uncertainty in 2016, the progress we have made during 2015 gives us confidence that KCS is positioned to maximize its near-term and longer-term business opportunities.”

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