Kansas City Southern will invest $550 million to $560 million in 2017 capital, a 4% to 5% percent reduction from its $584 million 2016 capex program.
Close to 45%, $247 million to $252 million, of the anticipated spend will go toward maintenance activities, while 6%, $33 million to $33.6 million, will go toward technology.
Two large 2017 expansion projects will be the continued work on the $60 million Sanchez Yard, located in Mexico across the border from the Nuevo Laredo yard, and on the Sasol project. KCS plans to spend 11% of its 2017 capital program, approximately $60 million, on the Sasol project and 7%, approximately $39 million, on Sanchez Yard.
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 and a car repair and locomotive shops. The Sasol project is scheduled to be completed in 2017. 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 railcar classification yard in Mossville, La.
KCS plans to spend 10% 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.
“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 KCS Executive Vice President and Chief Operating Officer Jeff Songer. “While overall capex will reduce, we remain committed to capacity enhancements across the network, led by our continued investment in Sanchez Yard and additional main line siding capacity projects.”