KCS’ Starling issues annual “State of the Railroad” memo

"This year, the Kansas City Southern management team refined the company's vision, restating it to be the leading transportation provider both within and between the U.S. and Mexico by consistently providing superior value to our customers, offering challenging careers to our employees and increasing value to our shareholders," stated KCS's President and Chief Executive Officer David Starling in his annual "State of the Railroad" memo.

“With our vision, we produced a business plan on a page, intended to synchronize the company’s primary objectives into a concise plan that cascades through all departments throughout the organization. Our top line priorities are to capitalize on the strategic location of the KCS cross-border rail network and the growing North American energy market, while maintaining a strong cost discipline within a safe and reliable operating environment,” he explained.

Starling pointed out a number of ways KCS is doing this including operating in a safe and reliable environment for the benefit of the employees, customers and the communities served;
building a strong, nimble, customer-oriented culture focused on performance, accountability and execution; promoting strong governance, regulatory compliance and risk management and
creating industry-leading shareholder return through revenue growth, cost management and improvement upon return on invested capital.

This year, U.S. Safety Operations and the TEaM Training Center were combined to streamline and provide consistency in all safety and training practices. A director of safety and two senior road foreman of engines were also added to the team. These positions, along with the director of the TEaM Training Center report to a new position, assistant vice president safety and standardization. As a result of a variety of safety initiatives, the memo states KCS has seen a reduction in the number of incidents and injuries this year and the costs incurred due to train accidents decreased by almost 50 percent as compared to last year.

In Mexico, the Safety Operations team executed a number of programs to enhance the safety of employees throughout KCSM. With support from IT, they distributed 140 Bluetooth for mobile devices for transportation, mechanical and engineering supervisors as part of the One Text or Call Could Wreck it All Campaign. As a pilot program, they introduced training for human behavior and the psychological aspect of safety for engineering employees. They provided defensive driver training for maintenance-of-way employees; a federal railroad license program for operations employees; medical evaluations for administrative employees as part of the PREVEN-IMSS program; drug and alcohol testing for crews, influenza vaccines for employees throughout the company. In addition, the Safety Operations team implemented the 15/24 program at the Monterrey terminal, supervising crew health and safety briefings, as well as civil protection plans and risk studies for other terminals throughout the KCSM network.

In 2015, KCS plans to spend a significant amount of capital investment in growth. As mainline infrastructure improves, the railroad is able to focus more of the capital spend on growth, including capacity expansions and acquisition of rolling stock. Capacity expansion will be focused on the KCSM Sanchez and KCSR-UP Brownsville subdivision. This year, KCS set in motion multi-year plans for expansion that will provide for improved fluidity and allow for projected volume growth.

This year in the U.S., maintenance-of-way and supporting crews installed approximately 600,000 ties and more than 50 track-miles of rail. Project highlights include:

• Major tie projects were completed on the line from Kansas City, Mo., to East St. Louis, Ill. (75,000 ties), the MSLLC line from Shreveport, La., to Meridian, Miss., (99,000 ties) and the Artesia subdivision in Mississippi (135,000 ties from late 2013 through early 2014). Annual cycle programs were completed on the Pittsburg and Heavener subdivisions from Pittsburg, Kan., to Heavener, Okla., and south to Shreveport.
• Track upgrades were completed between Beaumont and Port Arthur, Texas, with the installation of 15,000 ties and 7.5 track-miles of rail to support future business opportunities.
• KCS continued track upgrades between Beaumont, Texas, and Dequincy, La., by installing 20,000 ties and 10 track-miles of rail. The remaining 20-miles of rail will be replaced in 2015 completing a three-year program to relay 46 track-miles of rail.
• Another 35 miles of curve rail and other priority areas were replaced across the system.

Additional KCS projects to increase capacity and support future business growth include:

• Bridge replacement work completed in the Sabine River bottoms.This three-year program included the rebuild of six timber bridges and allowed a speed increase from 10 to 59 miles per hour over the segment.
• Steel repairs were completed on the Neches River Bridge providing a speed increase over a heavily utilized bridge in Beaumont.
• Eleven new turnouts were installed as part of the Power Assisted Switch (PAS) upgrade program to convert manual switches to power switches.
• Centralized Traffic Control (CTC) installation began on the Laredo subdivision in Texas with project completion expected in early 2015.
• Sidings at Lucas and Helme on the Beaumont subdivision were extended to a total length of approximately two miles each.
• CTC and a new siding at Cranell on the UP Brownsville subdivision were completed to improve capacity between Victoria and Robstown, Texas.
• Two storage tracks were constructed at Artesia Yard, adding 110-car capacity with each track.
• At High Oak Yard in Pearl, Miss., a new RIP facility, mechanical office and two R&D tracks were completed.
• Expansion projects at the Kendleton intermodal facility included adding 5,000 track-feet of track for automotive unloading, increasing parking for an additional 270 trailers and constructing crane pads for new gantry crane equipment.

Next year’s plans are in place to install approximately 550,000 ties and 50 track-miles of rail across the KCS network, including major tie programs on the Kansas City to East St. Louis line and Laredo subdivision. Additional capacity programs to be completed include:

• Vandervoort siding extension in Arkansas
• New 10,000 track-feet main at Knoche Yard in Kansas City
• New 8,500 track-feet R&D track and Customs inspection facility at Laredo
• New 8,500 track-feet storage track and crossovers at the KCSR intermodal facility in Kansas City.

Additionally in 2014, KCS worked to implement Positive Train Control (PTC). While a 2015 mandated deadline is on the horizon, it is believed that the industry will need more time to ensure a safe and effective solution is implemented, Starling stated. By the close of 2014, KCS will have invested approximately $84-million on PTC. KCSR will continue to pursue this objective and expects to invest another $35 million in 2015.