Kansas City Southern will spend between $550-$560 million on it's capital program in 2017, which is a four to five percent reduction from its 2016 capital program of $584 million.
Close to 45 percent, between $247-$252 million, of the anticipated spend will go toward maintenance activities, while six percent, between $33-$33.6 million, will go toward technology.
The two big growth project KCS will focus on in 2017 will be the continued work on the $60-million Sanchez Yard, located in Mexico across from the Nuevo Laredo yard, and the Sasol project. The Class 1 plans to spend 11 percent of its 2017 capital program, approximately $60 million, on the Sasol project and seven percent, approximately $39 million on Sanchez Yard.
“General and maintenance spend will reduce in 2017, given the improvements in infrastructure we have made over the past several years, including the completion of the Monterrey to Nuevo Laredo track upgrade, which was completed in 2016,” said Jeff Songer, executive vice president and chief operating officer, during KCS’ 2016 Fourth Quarter earnings call. “While overall CapEx will reduce, we remain committed to capacity enhancements across the network, led by our continued investment in Sanchez yard and additional mainline siding capacity projects.”
In 2016, KCS completed 10 classification tracks, one circulation track, car repair tracks and a wye track at Sanchez. The three-year project is on schedule to be complete in 2017 with 10 additional classification tracks, additional repair tracks, as well as a car repair facility and locomotive shop.
Also scheduled to be completed in 2017 is the Sasol project. In 2015, KCS reached an agreement with Sasol Chemicals LLC for the construction and long-term lease of a storage-in-transit (SIT) rail yard to support Sasol’s new ethane cracker and derivatives project in Lake Charles, La. In addition to building the SIT yard for lease to Sasol, KCS will replace and expand its existing rail car classification yard in Mossville, La.
KCS also aims to spend 10 percent of its 2017 capital program on Positive Train Control (PTC). Executives said 2017 will be the big push year for PTC and they anticipate a substantial reduction in spending for this category beginning in 2018.