BNSF Railway posted a $607 million profit for the first quarter, up 20 percent from the same period in 2010 and reflecting a mix of higher freight traffic, fuel fees and pricing.
Parent company Berkshire Hathaway also said BNSF had a 17.3 percent gain in revenue, to $4.5 billion, while operating expenses rose 19 percent to $3.4 billion. BSNF’s profit was 13.4 percent of revenue, up mildly from 13.1 percent a year earlier when receipts included a $74 million gain from a line sale in the state of Washington.
The performance reflects similar trends reported by other railroads and related firms of, with stronger volume and pricing as the economy recovers.
BNSF’s filing compares the latest quarter to two separate periods in first-quarter 2010, when it still reported as an independent company through Feb. 12 but was part of Berkshire after that. Berkshire summarized the 2010 and 2011 quarters with a traditional side-by-side comparison.
Average revenue per shipment was $1,935 dollars in the first three months of 2011, compared with $1,797 for the Feb. 13-March 31 period a year earlier and $1,757 for the first half of that quarter before the acquisition was finalized.
Berkshire said the higher per-unit average revenue reflected 8 percent more units handled and revenue gains across its four major cargo categories – consumer products (which includes intermodal), coal, farm products and industrial shipments. But it also reflected an “increased rate per car/unit” plus a 38 percent jump in fuel surcharges in the wake of surging diesel fuel costs.
The coal revenue gains, Berkshire said, came mainly from improved average receipts per car rather than volume, while agricultural product gains reflected higher wheat shipments. Increased construction product loads drove the industrial segment. Within consumer products, higher volume of both international and domestic intermodal traffic accounted for most revenue gains, along with improved automotive business.
Fuel surcharge revenue increased by $160 million from the 2010 quarter to $582 million this year, but fuel costs increased $280 million to $939 million. Like other railroads, BNSF updates its fuel fees over time using a fuel pricing point up to 60 days earlier, so the timing of railroad surcharges can be expected to trail actual price move. That means fuel fee revenue may not catch up to surging prices until the following quarter or later, and could keep rising when pump prices are declining.