Union Pacific reported record net income of $1.2 billion in the fourth quarter of 2013, up 13 percent year-over-year, which helped fuel a best-ever full-year profit of $4.4 billion.
Quarterly revenue increased 7 percent to more than $5.6 billion versus $5.3 billion in the fourth quarter of 2012, driven by core pricing gains and volume growth, but slightly offset by declining coal volume and challenging winter weather, according to the Class I railroad. Revenue from intermodal was flat year-over-year, and coal revenue dropped 1 percent, but agricultural products, automotive, industrial products and chemicals were up 19 percent, 17 percent, 14 percent and 3 percent respectively.
Shipment volume in the fourth quarter, as measured by total revenue carloads, rose 2 percent compared with the same period in the previous year. Shipments of agricultural products, automotive, industrial products and intermodal were up 13 percent, 10 percent, 9 percent and 2 percent respectively, while coal volume dropped 10 percent and shipments of chemicals fell 1 percent.
The Omaha, Neb.-based company noted that intermodal volume was up partially because of conversions from highway transportation in the domestic market. UP’s domestic intermodal volume was up 5 percent year-over-year in the fourth quarter, while international volume dropped 1 percent. Overall, domestic intermodal pricing growth is expected to be weak in 2014, despite healthy volume gains — particularly traversing the U.S.-Mexico border and on the U.S. East Coast — and tightening truck capacity. International intermodal pricing is expected to be more railroad-specific.
- UP’s Earnings in the Third Quarter
- UP’s Earnings in the Second Quarter
- UP’s Earnings in the First Quarter
UP recently began intermodal service between Laredo, Texas, and Memphis, Tenn., as shippers appear to be increasingly shifting their cross-border freight from truck to rail. The railroad also plans to open a $400 million intermodal ramp and fueling station in Santa Teresa, N.M., on Aug. 1 to serve work as a hub for loads coming from the U.S. West Coast and attract trade coming over the Mexican border.
“For the first time in six quarters, we reported overall volume growth, despite significantly weaker coal shipments,” said Jack Koraleski, UP’s CEO, in a written statement. He also noted that the quarterly shipments highlight a “strong” grain harvest.
UP’s operating ratio of 65.0 percent was a fourth quarter record, 2.1 points better than the fourth quarter of 2012 and just 0.2 point off the all-time quarterly record of 64.8 percent set in the third quarter of 2013.
For the full year of 2013, UP’s profit rose 11 percent from $3.9 billion in 2012 and 33 percent from $3.3 billion in 2011. Annual revenue totaled $22.0 billion, up 5 percent from $20.9 billion in 2012 and 12 percent from $19.6 billion in 2011. Shipment volume in 2013, as measured by total revenue carloads, was flat year-over-year.
Although coal revenue was down in the fourth quarter, it rose 2 percent year-over-year for the full year of 2013, despite a 9 percent decline in volume. Intermodal revenue rose 2 percent, but volume was flat compared with 2012. Agricultural products revenue and shipments were both up in the fourth quarter, but agricultural revenue was flat year-over-year for the full year of 2013 and shipments were down 3 percent. Automotive revenue and shipments were up 15 percent and 6 percent respectively, and chemicals revenue and shipments rose 8 percent and 6 percent respectively. Industrial products revenue increased 9 percent, and shipments rose 4 percent.
“As we look at 2014, we see signs that the economy is slowly strengthening,” Koraleski said. “We’re well-positioned for economic growth and are confident in our ability to deliver on our customers’ growing transportation needs.”
The company noted that it expects record earnings and operating ratio in 2014.