After capturing more than half of the rail industry's 2013 volume increase, BNSF railroad, a wholly owned unit of Warren Buffett's Berkshire Hathaway (BRK.A -0.72%) (BRK.B -0.61%), announced yesterday it has approved a $5 billion capital expenditure plan for 2014. This year's spending will be approximately $1 billion more than BNSF spent in 2013 to enhance systems and processes.
According to BNSF's statement, the $5 billion in expenditures will fund an estimated $2.3 billion to strengthen its "core network and related assets," $1.6 billion to acquire new trains and equipment, $900 million for terminal and intermodal expansion, and approximately $200 million to continue installing positive train control (PTC) systems. PTCs are a key National Transportation Safety Board (NTSB) initiative utilizing integrated technology and communications systems to enhance railroad safety.
BNSF expects to continue its growth in 2014 due to increased volumes in the agricultural, automotive, intermodal, and industrial products (including crude oil and coal) industries. Some projects should help alleviate congestion near the booming Bakken oil field in North Dakota and Montana. Last week, the National Association of Railroad Passengers complained to officials that the growth in oil shipments was disrupting Amtrak passenger service.
Carl Ice, president and CEO of BNSF, said of 2014's capital expenditure plans: "BNSF's capital investments are an integral part of making sure our network is well prepared for the demand for freight rail service in the U.S. and helps ensure the continued integrity and reliability of our network."
Berkshire Hathaway acquired BNSF, known as Burlington Northern Santa Fe at the time, in late 2009 for $34 billion, the largest investment of Warren Buffett's storied investment career.
BNSF Railway operates on 32,500 route miles of track in 28 states and two Canadian provinces.
-- Material from The Associated Press was used in this report.