Union Pacific reports decline in carload volumes for 3Q16

"Continued momentum from our productivity initiatives, as well as positive core pricing, helped partially offset the decline in total carload volumes. While many of the same volume challenges have continued throughout the year, we are keeping a laser focus on our six value tracks. This strategy ensures we provide our customers with an excellent value proposition and service experience, while efficiently and safely managing our resources," said Lance Fritz, Union Pacific Chairman, President and CEO.

Operating revenue came in at nearly US$5.2 billion but this was down 7% in 3Q16 compared to 3Q15. Third quarter business volumes, as measured by total revenue carloads, declined 6% compared to 2015. While shipments of agricultural products grew 11%, volumes declined in the remaining five business groups.

Quarterly freight revenue decreased 7% compared to 3Q15, as volume declines and lower fuel surcharge revenue more than offset core pricing gains.

Union Pacific's 62.1% operating ratio was unfavourable by 1.8 points compared to the record 3Q15, but improved 3.1 points sequentially.

The US$1.57 per gallon average quarterly diesel fuel price in 3Q16 was 13% lower than the same quarter in 2015.

Quarterly train speed, as reported to the Association of American Railroads, was 26 mph, 2% faster than 3Q15.

The company repurchased 9 million shares in 3Q16 at an aggregate cost of US$851 million.

"The macroeconomic environment still has its challenges – an unstable global economy, the relatively strong US dollar, and continued soft demand for consumer goods. However, certain segments of the economy, such as grain and energy, are showing signs of life," Fritz said in a comment on the 2016 outlook. "Closing out 2016 and heading into next year, we are optimistic about the opportunities that lie ahead. In the coming months, we will continue to do what Union Pacific does best: operate a safe, efficient and productive network while providing an excellent customer experience and delivering solid shareholder returns."

Read the article online at: https://www.drybulkmagazine.com/rail-barge/24102016/union-pacific-reports-decline-in-carload-volumes-for-3q16/