Friday, January 26, 2018

UP’s planned 2018 capital program up 6%

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UP’s planned 2018 capital program up 6% Union Pacific

Union Pacific will target a 2018 capital plan of approximately $3.3 billion, pending final approval from its Board of Directors.


The number was revealed during the railroad's 2017 Q4 earnings call and is approximately $200 million or 6 percent above its 2017 capital program of $3.1 billion.

As expected, the majority of the program, $1.97 billion, will go toward infrastructure replacement. The remaining category breakdowns include $460 million for locomotives and equipment; $45 million for capacity and commercial facilities; $240 million for technology and $160 million for positive train control (PTC).

Cameron Scott, executive vice president and chief operating officer, gave a brief update on PTC during the Q4 earnings call where he said about 60 percent of the total track miles requiring the technology were at full implementation and operational by the end of 2017.

"The western region has been completed. The northern region is near completion and we're well underway on the southern region. With these new regions come a new set of challenges both from a technological and training perspective," said Scott. "The team is doing an excellent job troubleshooting and building upon the lessons learned from those locations where PTC has been implemented. We will continue working through these challenges as we progress towards the 2018 PTC deadline."

Scott said one challenge the railroad will face in the next year concerning PTC is the interoperability between UP's and other railroads.

On the facilities side, the railroad mentioned its Brazos Yard project, which began construction this month. Scott said the yard would help support expected volume growth from UP's customers in the southern region.

"We will improve service by decreasing car handlings and car cycle times. It will also be the most efficient hump yard in our rail network with the lowest operating cost," said Scott.

The yard is estimated to cost $550 million to build and is expected to be completed in 2020.

The railroad also noted its safety performance during 2017.

"Our reportable injury rate was 0.79, slightly higher than the full year record of 0.75 achieved in 2016. Although we continue generating near record safety results, we won't be satisfied until we reach our goal of zero incidents, getting every one of our employees home safely at the end of each day," said Scott. "With regards to rail equipment incidents or derailments, our reportable rate improved 3 percent to 2.94. In public safety, our grade-crossing incident rate increased 5 percent versus the 2016 to 2.55, as we continue to reinforce public awareness to community partnerships and public safety campaigns."

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