The US Class 1 railway’s 59% operating ratio is a quarterly record and the fourth consecutive quarter below 60%, improving 460 basis points compared with the first quarter of 2019.

However, operating revenue was down 3% to $US 5.2bn compared with first quarter of 2019, while total revenue wagonloads decreased by 7% as a positive business mix and core pricing gains were offset by lower volumes and decreased fuel surcharge revenue. Industrial traffic rose 3%, while bulk and premium freight dropped 5% and 6% respectively.

Nevertheless, UP reports some notable achievements in its first quarter results:

  • the average quarterly diesel fuel price was 10% lower than in the first quarter of 2019
  • fuel consumption rate improved by 5%, a first-quarter record in 2020
  • reportable personal injury rate fell by 11% to 0.80 incidents per 200,000 employee-hours
  • quarterly freight wagon velocity was up 8% at 336km/wagon/day
  • locomotive productivity improved by 18%, and
  • average maximum train length increased by 15% to 2559m.

“Against the backdrop of the emerging Covid-19 pandemic and a challenging volume environment, we leveraged productivity to deliver strong financial results,” says UP’s chairman, president and CEO Mr Lance Fritz. “We also made substantial improvement in employee safety, which is a testament to our dedicated employees. Our rail network has never run better, providing a safer, more reliable and efficient service product to our customers.”

Grim outlook

UP says it expects second quarter 2020 wagonload volumes to be down by around 25%, compared with second quarter 2019. “Although the situation is fluid and highly uncertain, the company fully expects to maintain sufficient liquidity to sustain an extended period of lower volumes,” UP says

“Our first priority is the health and safety of our employees during the Covid-19 pandemic, as they perform the work necessary to move the goods communities need during this national emergency,” Fritz says. “The eighteen month implementation of Unified Plan 2020 has put our company in a position of strength, with a strong balance sheet and ample liquidity, as we face today’s fluid and uncertain situation. We remain focused on providing a highly consistent, reliable and efficient service product for our customers.”