Union Pacific Warns Of Weaker-Than-Expected 2nd-Half Volumes

By Colin Kellaher

Union Pacific Corp. (UNP) on Wednesday warned that freight volumes in the second half of the year would be weaker than previously expected, as the rail industry grapples with slumping traffic.

The Omaha, Neb., freight railroad said it now expects volumes will decline in the mid-single digits in the second half.

Union Pacific in July had forecast freight volumes would be down about 2% in the second half following a 3% drop in the first half.

However, U.S. railroads have been posting large weekly declines in traffic, according to data from the Association of American Railroads.

In its most recent report, the AAR said U.S. rail traffic tumbled 5.9% in the week ended Aug. 24 after falling 5.2% a week earlier. U.S. rail traffic fell 5.5% for the month of July, according to AAR data.

In an investor presentation posted on its website, Union Pacific said third-quarter carloadings through Sept. 1 are down 7%.

Despite the volume shortfall, Union Pacific said it still expects to achieve an operating ratio below 61% for the year, with the measure falling below 60% by 2020.

Operating ratio is a closely watched metric that measures the percentage of revenue consumed by expenses, where a lower figure represents an improvement.

Write to Colin Kellaher at [e-mail]

(END) Dow Jones Newswires

September 04, 2019 09:41 ET (13:41 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.