Rail Freight Continues to Grow

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Just recently in Omaha, Nebraska, Union Pacific Railroad announced a strong second-quarter. Net income increased by 17% to $1.29 billion. Jack Koraleski, Union Pacific chief executive officer, shares:

“Union Pacific achieved record quarterly financial results, leveraging the strengths of our diverse franchise to handle strong demands in the face of challenging operating conditions. We were pleased to see strong volume growth which, combined with solid core pricing, drove more than a two-point improvement in our Operating Ratio to a record 63.5 percent for the quarter.”

Union Pacific relates its recent improvements to strong volume and core pricing growth in freight. Freight revenue grew 10% to $5.6 billion.

The Canadian Pacific Railway Ltd. posted their highest growth so far with 48% year-by-year improvement in earnings per share. CP’s Chief Executive Officer, E. Hunter Harrison expresses great pride as their team continues to ‘demonstrate resiliency’ despite the devastating winter in the US Midwest causing tremendous operational challenges for many freight operators. Freight revenue in Q2 2014 for CP grew by 12% to $1.6 billion compared Q2 2013.

On the other hand, Canadian Nation (CN) noted an operating income of $1.2 billion (a 21% increase), a substantial growth attributed to Grain and Fertilizer (35%), Metals and Minerals (20%), Intermodal (17%), Petroleum and Chemicals (17%), and Automotive (15%). Claude Mongeau, CN President and CEO, says the solid operational recovery of CN is due to their ability to accommodate growth with the lowest incremental costs. Their freight revenue was $2.9 billion, a 22% growth compared to Q2 2013.

Jumping to the West, Kansas City Southern has recorded adjusted operating income of $214 million, a 20% YoY growth. Their overall carloads were 7% higher with the total revenue led by growth in Agriculture and Minerals (33%), Automotive (25%), Intermodal (14%), and Industrial and Consumer products (10%).  KCS reported a 12% growth in freight revenue to $650 million compared to Q2 2013.

Other railway companies who have seen promising increase in the second quarter are CSX Transportation, with reported net income of $529 million (freight revenue: $3.2 billion), a 1.5% increase or 53 cents per share. Also, there’s Norfolk Southern Railway with net income of $562 million (freight revenue: $3 billion), 21% increase from the second quarter of 2013.

BNSF Railway remains a major competitor to Union Pacific, with freight revenue of $5.6 billion, despite congestion in their lines due to limited cars and slow train speed. BNSF is reported to be spending $1 billion to address their current plight and pushing forward with doubling their train speeds.

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