Union Pacific Railroad reported a record profit of $785 million in the second quarter, a 10 percent year-over-year increase, as strong pricing offset modest freight traffic growth and $14 million in spending to fight floods.
Five of the six major cargo categories increased in volume, although intermodal traffic slid 1 percent compared to the 2010 period, with 819,000 containers and trailers hauled.
By The Numbers: U.S. Intermodal Container Traffic
UP’s overall freight traffic count grew 3 percent, but average per-shipment revenue rose 13 percent across all cargoes, reflecting the railway's pricing power during a slow economic recovery. That included a 14 percent rise in average intermodal revenue to $1,108 per box.
UP is the largest North American freight line by most measures, with a track network that sprawls across the West and Midwest. It is the second major railroad to announce results, after CSX reported strong earnings earlier this week.
Total revenue jumped 16 percent to nearly $4.9 billion, but fuel and other costs drove expenses 19 percent higher. Higher costs, including flood mitigation costs, left net income at 16.2 percent of revenue, down from a 17 percent profit margin a year earlier.
Along with the mild increase in freight volume, UP said it benefited from “core pricing gains” and higher fuel surcharges.
James R. Young, UP’s chairman, president and CEO, said its diverse customer base allowed it to post record results, despite flooding along the Mississippi River this spring and now on the Missouri.
It also has the largest workforce in the railroad industry. UP averaged 44,971 during the second quarter, up 6 percent from the 2010 period. Some performance measures worsened amid the weather delays, but UP’s own measure of customer satisfaction increased.
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