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Union Pacific reported 2024 fourth quarter net income of $1.8 billion, up from $1.7 billion a year ago, as higher rail freight volumes drove record profits.
The largest Class 1 railroad (NYSE: UNP) reported net income for full year 2024 of $6.7 billion, from $6.4 billion in 2023.
“We had a very successful year in 2024, with an operating ratio of better than 58%,” said Chief Executive Jim Vena, in a call with analysts and media. “That shows how our team executed on strategy, safety, and service for overall operational excellence.
“It was a fantastic end to 2024.”
While carload volumes were 5% ahead y/y In the fourth quarter ended Dec. 31, operating revenue of $6.1 billion was off 1% on lower fuel surcharge revenue and unfavorable business mix, partially offset by increased volume and core pricing gains.
Intermodal traffic increased by 16% in the quarter, though average revenue per car dipped 9% y/y.
International intermodal volumes were up by 26% on a surge of import demand, outpacing strong container flows through West Coast ports.
Domestic intermodal grew as the railroad wooed more shipments away from trucks.
Revenue carloads were up 5%, led by fertilizer, up 3%, and grain and chemicals, up 8%.
Coal revenue continued its long-term decline, down 29% in the quarter, but UP expects to partially offset that in 2025 under a new contract with electric utility Lower Colorado River Authority of Texas.
Grain benefitted from a good harvest and strong export business to Mexico, while plastics demand also grew, said Kenny Rocker, executive vice president, marketing and sales, on the call. “There was softer demand in construction materials, sand and rock. We are keeping a watchful eye on potential tariff changes which could impact volumes. We are anticipating a softer economic environment in 2025.”
Freight volumes are expected to be buttressed by $1.5 billion in project development now underway. The Gulf Coast is a specific target in that area.
Operating ratio was 58.7%, an improvement of 220 basis points, which included an unfavorable 70 basis point impact from the ratification of a new union contract.
Operating income grew 5% to a record $2.5 billion.
“There are a lot of unknowns in 2025 — tariffs, regulatory changes, interest rates — but that’s been the case in the forty-plus years I’ve been in railroading. It is what it is,” said Vena, who started his career as a train crewman. “Operating with a ‘buffer’ in railcars, locomotives and operating capacity paid dividends. We are expecting growth of high single digits to low double digits in 2025.”