Norfolk Southern 2016 capex reflects strategic focus toward streamlined railroad

Written by Mischa Wanek-Libman, editor
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Norfolk Southern has a planned capital improvement budget of $2.1 billion in 2016, which is $300 million less than its record $2.4 billion capital plan in 2015.

 

Most areas of in the NS capital plan will see reduced spending including roadway ($817 million versus $927 million in 2015); infrastructure ($89 million versus $104 million in 2015); facilities and terminals ($222 million versus $238 million in 2015) and other projects ($163 million versus $199 million in 2015). The area to see the greatest reduction in spending was in freight cars. In 2015, NS spend $404 million while in 2016 the railroad plans to only spend $135 million.

NS spent about one-fifth of its 2015 budget on locomotives, technology and positive train control. This year, those three areas will all see spending increases and together make up about one-third of the 2016 capital plan. The railroad plans to spend $351 million on locomotives in 2016 versus $238 million last year; $77 million on technology versus $65 million in 2015 and $246 million on PTC, which is a $26 million increase over last years spending.

The 12.5 percent capital reduction over last year is in line with the railroad’s strategic plan to streamline operations, reduce costs and drive profitability. NS plans to dispose of or downgrade 1,000 miles of track in 2016 as traffic is rerouted onto higher-density lines. Additionally, the railroad plans to reduce the size of its car fleet and locomotive maintenance expenses.

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