Warren Buffett’s Berkshire Hathaway Inc. (A:US) plans to increase capital spending at its railroad to about $4.1 billion this year, as the company prepares to handle rising oil shipments and expands intermodal terminal capacity.
The 2013 proposal includes $2.3 billion on the core rail network and about $1 billion on locomotive, freight car and equipment purchases, BNSF Railway Co. said in a statement yesterday. The Fort Worth, Texas-based unit is also spending about $250 million on a U.S. rail-safety mandate and $550 million for terminal, line and intermodal expansion and efficiency projects.
The expansion plans are designed in part to accommodate industrial product shipments tied to burgeoning oil production in the Bakken shale formation, concentrated in North Dakota. Intermodal shipments, which can move by sea, rail and highway, are also a focus for BNSF as railroads seek to haul more consumer goods.
“They are the primary player in the Bakken because of their lucky circumstance of having a railroad to North Dakota,” Tony Hatch, an independent rail analyst in New York, said in a telephone interview. With intermodal shipments, he said, “it’s quite encouraging to see them feel they have the opportunity to spend. To me, that says the intermodal story is hardly over.”
Chief Executive Officer Matt Rose said earlier this month that the railroad will spend “a couple hundred million dollars” on capital improvements to haul more petroleum to refineries from the Bakken formation, and that he expects BNSF to boost crude-oil shipments 40 percent this year.
“This record capital plan continues our long-term focus on ensuring our network is prepared for the growing U.S. demand for freight rail,” Rose said in the statement. “We are focused on investing to meet our customers’ expectations and to expand capacity where growth is occurring.”
BNSF said it spent $3.6 billion on capital investments last year.
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