Katie Farmer, the new president and CEO of Berkshire Hathaway’s BNSF Railway Company is making no bones about her attitude towards BNSF’s future. It is about growth.
“We have always had and will always have a bias for growth,” notes Farmer, in comments to the Midwest Association of Rail Shippers. “We are a reflection of what goes on in the industrial and consumer economies. And we all know what happens in those economies: Volumes fluctuate, opportunities present themselves, opportunities go away. And so what that means for us is that we always have to be nimble enough and see growth opportunities in advance and prepare ourselves to be able to say yes.”
BNSF has laid out a 2021 capital investment plan of $2.99 billion, which is down just 2 percent from 2020’s $3.08 billion in capital spending.
“Every year through our capital plan, we work to ensure we are able to continue to operate a safe and efficient rail network, provide our customers with the level of service they have come to expect from BNSF as well as position ourselves for future growth opportunities,” Katie Farmer said.
The largest component of this year’s capital plan will be to replace and maintain BNSF’s core network and related assets, much like last year’s $3.08 billion capital program. Maintaining the railroad results in less unscheduled service outages that can slow down the rail network and reduce capacity.
The maintenance component of this year’s plan is $2.41 billion. The projects included in this part of the plan mostly entail replacing and upgrading rail as well as track infrastructure like ballast and rail ties (which are the main components for the tracks on which BNSF trains operate) and maintaining its rolling stock. It will include nearly 11,000 miles of track surfacing and/or undercutting work and the replacement of 428 miles of rail and approximately 2.6 million rail ties.
Approximately $400 million of this year’s capital plan will be for expansion and efficiency projects, and about $180 million of this year’s capital plan is for freight cars and other equipment acquisitions.
On its Southern Transcon route between the West Coast and the Midwest, BNSF will continue a multi-year effort to add several segments of new double-track in eastern Kansas. Once fully completed, BNSF will have 50 miles of additional main track to support traffic growth.
In addition, in the Pacific Northwest, BNSF will continue a multi-year bridge project near Sandpoint, Idaho to increase train capacity.
© 2021 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.