OMAHA: Union Pacific’s third-quarter profit fell 19% railway transported fewer shipments and costs remained high, but the average speed of trains improved by 5% as new CEO Jim Vena began to adjust operations.
The Omaha, Nebraska-based railroad said it earned $1.53 billion, or $2.51 per share, during the quarter. That’s less than $1.9 billion, or $3.05 per share. But the results exceeded the $2.42 that 12 analysts polled by FactSet Research had expected.
The number of shipments delivered by Union Pacific fell 3% in the quarter, and while costs rose about 4%, they remained high at $3.76 billion.
The railroad’s revenues fell 10% to $5.9 billion due to lower volume and the lag between when fuel prices rise and when Union Pacific’s fuel surcharge takes effect.
“We have faced many challenges this quarter, including persistent inflationary pressures and a decline in car volumes,” said Vena, who took the job last month. But the average speed of the railroad’s trains increased to 200 daily miles per car. and other productivity measures also improved during the quarter.
Train speeds have continued to improve this month to about 130 daily miles per car today, but Vena said he wants that to continue to improve to reach the 220s that Union Pacific was delivering before the pandemic.
“We are aligning the team around our strategy, focused on being the best in safety, service and operational excellence while driving the growth of the railroad,” he said.
Vena said one of his first steps is to try to move decision-making lower in the operation and eliminate layers of bureaucracy so it can respond more quickly. More cuts are likely, but major changes are not expected because the railroad overhauled its operations several years ago.
Vena said he still sees room to improve productivity, but he won’t be able to make the same drastic changes he made when he was Union Pacific’s chief operations officer in 2019 and 2020 because the railroad is already more efficient than when. .
The railroad will try to use attrition instead of layoffs to reduce the size of its workforce, become more efficient and match current volumes, Vena said.
The railway company still expects total volumes to decline slightly this year due to weak consumer demand. So deliveries are unlikely to exceed the current forecast for flat industrial production.
Union Pacific is one of the nation’s largest railroads, operating more than 30,000 miles of track in 23 western states. Safety has been an important focus for the sector this year since a Norfolk South Train derailed in eastern Ohio in February. UP and the other major railroads are working to improve safety, even though they already have a reputation for being the safest way to move freight overland.
The Omaha, Nebraska-based railroad said it earned $1.53 billion, or $2.51 per share, during the quarter. That’s less than $1.9 billion, or $3.05 per share. But the results exceeded the $2.42 that 12 analysts polled by FactSet Research had expected.
The number of shipments delivered by Union Pacific fell 3% in the quarter, and while costs rose about 4%, they remained high at $3.76 billion.
The railroad’s revenues fell 10% to $5.9 billion due to lower volume and the lag between when fuel prices rise and when Union Pacific’s fuel surcharge takes effect.
“We have faced many challenges this quarter, including persistent inflationary pressures and a decline in car volumes,” said Vena, who took the job last month. But the average speed of the railroad’s trains increased to 200 daily miles per car. and other productivity measures also improved during the quarter.
Train speeds have continued to improve this month to about 130 daily miles per car today, but Vena said he wants that to continue to improve to reach the 220s that Union Pacific was delivering before the pandemic.
“We are aligning the team around our strategy, focused on being the best in safety, service and operational excellence while driving the growth of the railroad,” he said.
Vena said one of his first steps is to try to move decision-making lower in the operation and eliminate layers of bureaucracy so it can respond more quickly. More cuts are likely, but major changes are not expected because the railroad overhauled its operations several years ago.
Vena said he still sees room to improve productivity, but he won’t be able to make the same drastic changes he made when he was Union Pacific’s chief operations officer in 2019 and 2020 because the railroad is already more efficient than when. .
The railroad will try to use attrition instead of layoffs to reduce the size of its workforce, become more efficient and match current volumes, Vena said.
The railway company still expects total volumes to decline slightly this year due to weak consumer demand. So deliveries are unlikely to exceed the current forecast for flat industrial production.
Union Pacific is one of the nation’s largest railroads, operating more than 30,000 miles of track in 23 western states. Safety has been an important focus for the sector this year since a Norfolk South Train derailed in eastern Ohio in February. UP and the other major railroads are working to improve safety, even though they already have a reputation for being the safest way to move freight overland.
