CSX Corporation (CSX), Kansas City Southern (KSU): A Shifting Landscape

Kansas City Southern (NYSE:KSU) has plans for $515 million in capital expenditures for 2013. CEO David Starling noted the massive growth projections for rail in the next 30 years in the company’s fourth-quarter 2012 earnings call, concluding, “I don’t know when capacity becomes a bad investment.” The company saw its greatest growth in 2012 from crude oil, at 350% for the full year, albeit from a very low base.

If we shoot on over to the other side of the country, we see wide-open spaces threaded with BNSF — part of Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) empire — and Union Pacific Corporation (NYSE:UNP). If agriculture is moving north and west, it sure looks like there’s room for the incumbents to capture some value.

BNSF is investing $4.1 billion in locomotives, freight cars, a massive terminal southwest of Kansas City Southern (NYSE:KSU), and new track and equipment for its Bakken shale oil business. Union Pacific is spending $3.6 billion on a huge terminal in New Mexico, and is designing a more than $400 million bridge over the Mississippi in Iowa to replace an old drawbridge that often delays trains for hours on end.

Greenbrier Companies Inc (NYSE:GBX), a freight-car equipment maker, is likely to be a beneficiary of all this investment. The company has been public in its view that it will ride the crude-by-rail wave, irrespective of Keystone’s fate. Carl Icahn seems convinced, and he disclosed a nearly 10% stake in Greenbrier Companies Inc (NYSE:GBX) at the end of last year.

The article Food and Oil: Rail’s Perfect Storm originally appeared on Fool.com and is written by Sara Murphy.

Fool contributor Sara Murphy has no position in any stocks mentioned, and neither does The Motley Fool .

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