Canadian National to Spend $1.9 Billion on Capital Improvements

Matching peer railroad operator Norfolk Southern (NYSE: NSC  ) nearly dollar for dollar, CN (NYSE: CNI  ) -- Canadian National Railway -- announced Tuesday that it plans to spend approximately $1.9 billion to maintain and upgrade its railway network, grow its business, and improve customer service in 2013.

The company broke down its capital spending program thusly: $1 billion will be spent on replacing rail, ties, and other capital equipment, as well as on repairs to bridges, in order to "continue operating a safe railway and to improve the productivity and fluidity of the network." A further $700 million will be spent to accommodate growth among CN's key customers. This effort will include making investments in transloading operations and distribution centers for rail-to-truck transfer of freight, building a new intermodal terminal in Joliet, Ill., completing a logistics park in Calgary, and investing in IT equipment.

Finally, CN intends to spend about $200 million on purchasing new and refurbishing existing locomotives, freight cars, and intermodal equipment.

Interestingly, this is about half the amount that Norfolk Southern said it plans to invest in locomotives and freight cars. In further contrast, CN notes that its 2013 capital spending program is going to be about 5.6% bigger than its allotment for this purpose in 2012. That's as compared with Norfolk Southern's capex spending, which will be down 11%.


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