North American rail provider Kansas City Southern has reported a 28% increase in revenue from the automotive sector in its third quarter results and has announced higher investment in its network as it anticipates handling more US-Mexico cross border traffic, including that for intermodal and vehicle cargo.
KCS’s strongest demand for finished vehicle logistics services is coming from the Celaya area in Mexico, where Honda’s new plant is located. KCS is focusing efforts on balanced programmes for finished vehicles shipped in AutoMax equipment to and from Lázaro Cárdenas.
KCS’s Mexican subsidiary, KCS de Mexico, is one of the two main railway providers for freight in Mexico.
Overall the company reported revenues for the third quarter at $678m, an increase of 9% over the same quarter in 2013. Automotive revenue stood at $65.8m, the highest percentage increase, followed by industrial and consumer products, which showed a 13% increase reaching $166.9m. Intermodal and agriculture and minerals followed, growing by 11% and 8% respectively.
Operating expenses in the third quarter were $448m, 6% higher than 2013, while operating income stood at $229m compared with $200m a year ago, a 15% increase.
“An operating ratio of 66.1% was attained primarily due to volume growth, especially in the automotive and grain commodity groups, as well as system efficiency and cost controls,” said KCS’s president and CEO, David Starling.
Reported net income for the quarter amounted to $138m.
The latest results follow Q2 figures that showed a 25% increase in business from the automotive sector.