Deutsche Bahn Capital Spending to Break Records

German railroad company Deutsche Bahn said it will spend $525 million on new rail cars, locomotives and cargo facilities across Europe in 2010 to keep pace with rising freight traffic.

"This is a record amount which we plan to invest at exactly those points where there is increasing customer demand for our transport services and where modern equipment is required," said Karl-Friedrich Rausch, member of the management board of DB Mobility Logistics.

DB Schenker Rail, Deutsche Bahn's rail freight and logistics unit, will spend around $243 million on new rail wagons and repairing the existing fleet, and a further $214 million on new locomotives.

Deutsche Bahn news from JOC:
Deutsche Bahn Earnings Up From Freight Traffic.

The remaining funds will be spread between various investments in freight facilities and information technology equipment.

The fleet modernization program is focused on freight cars for the coal and steel sectors and the automotive and chemicals industries.

By the end of the year DB Schenker Rail will have bought 1,472 new freight cars, including 700 wagons specially designed for coal and steel transport, and 71 new locomotives.

The investments will be spread across DB Schenker Rail's domestic market and across Europe, including the UK, the Netherlands, Spain and Denmark.

Deutsche Bahn's first half cargo traffic soared 40.1 percent, or 58 million metric tons, from a year ago to 203 million tons, driven by sharp increases in the transport of iron ore and scrap metals, as the German economy and the company's European markets recovered from the 2009 recession.

The rebound in freight contributed to a 26 percent increase in first half operating profit to $1 billion on an 18.8 percent rise in revenue to $20.9 billion.

-- Contact Bruce Barnard at brucebarnard47@hotmail.com.