UP’s volumes are down 7% for the third quarter to date, Chief Financial Officer Rob Knight told an investor conference today. As a result, UP expects traffic in the second half of the year to be down in the mid-single-digit percentage range. Previously UP forecast a decline of around 2%.
The railroad stuck with its financial guidance, however, including an operating ratio below 61% this year and a sub-60% operating ratio in 2020 as rate increases and cost-cutting more than offset sluggish volume levels amid the railroad’s ongoing shift to Precision Scheduled Railroading.
UP expects employment to fall 10% for the full year, Knight says. UP had 36,857 employees in the second quarter, which was 8% below the levels of a year earlier.
UP’s intermodal traffic is down 10% for the third quarter through the end of August. Overall carload traffic declined 5% for the quarter to date, driven partly by a 17% decline in coal shipments.
Kenny Rocker, UP’s executive vice president for marketing and sales, said the volume losses would have been greater if not for the railroad’s service improvements.
“Our car trip plan compliance is the best it’s been in … several years now,” Rocker says.
“That reliability will pay a lot of dividends in terms of growth and how we approach the marketplace,” Rocker adds.
That’s not to say UP is pleased with its 71% trip plan compliance through the end of August. It’s the pace of improvement that’s encouraging, Rocker says.
UP’s 68% trip plan compliance in July was 7 points higher than a year earlier.
Knight and Rocker spoke at the Cowen & Co. 12th Annual Global Transportation Conference.
