Trinity Industries (NYSE:TRN)
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Mexican railroad company Ferromex said Friday that it is increasing its capacity in response to rising demand for crops, and in anticipation of a rebound in agricultural production during the 2012-2013 season.
Ferromex, which is controlled by mining and railroad concern Grupo Mexico SAB (GMEXICO.MX), is investing $56.5 million in 775 new high-capacity hopper cars, which it is acquiring through October from the U.S. railroad car manufacturer Trinity Industries Inc. (TRN).
The cars are already being incorporated into the Ferromex fleet to help transport this year's wheat, corn and sorghum harvests, which were damaged by freezes and drought in northwestern states. Demand for those crops is expected to be at its peak in July and August.
Ferromex said the government estimates that production of the three crops will be more than 3.15 million tons between May of this year and April 2012. For Ferromex, that represents more than 35,000 carloads. The capacity of the new railroad cars, which are built at Trinity's plant in northern Mexico, is 5,250 cubic feet.
"The new equipment that is already being incorporated into the Ferromex fleet will allow the company...to increase the railroads role in moving the crops," Ferromex said.
Between May 2010 and April 2011, Ferromex transported 46,500 carloads, and the company expects volume for the upcoming season to be higher than this year's.
Earlier this year, Ferromex maintained last year's freight tariff rates for producers in Baja California, Sonora, Sinaloa and Nayarit to ease the burden on them after weather damaged their crops. In 2010, agricultural freight represented 34% of the company's total revenue and 23% of carloads.
-By Jean Guerrero, Dow Jones Newswires; (5255) 5980-5180, email@example.com