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Counting what’s in freight cars, as Union Pacific reports earnings

Marketplace Contributor Apr 18, 2013
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Counting what’s in freight cars, as Union Pacific reports earnings

Marketplace Contributor Apr 18, 2013
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Updated (9:00am EST): Union Pacific reports first-quarter revenues were up 3 percent, despite a drop in the amount of coal and grain the railroad shipped. According to UP’s earnings report, which came out Thursday morning, revenues totaled $5.3 billion in the first quarter. The growth was attributed to higher shipments of chemicals, automotive products and intermodal containers. 

The success of big companies like UP may tell us something about which industries are doing well. And with that in mind, here’s a look at what’s on board American trains, industrywide — starting with coal. In 2011, it made up 43 percent of all U.S. rail freight, according to the Association of American Railroads.

But “coal shipments are down dramatically,” says the group’s CEO, Ed Hamberger.

He blames the crash on environmental regulations and competition from cheaper natural gas. Rail companies need to be “quick and nimble” to adapt, he says. And it looks like they are, according to Page Siplon, who runs the Georgia Center of Innovation for Logistics.

“Sand and oil and water from the fracking industry — and all the products associated with it — has become a new market for them,” Siplon says.

And don’t forget building supplies. There’s more lumber on American trains thanks to the improved housing market.

Supply chain expert Mary Holcomb says the automotive industry is also speeding up.

“That’s really a staple and a mainstay for the railroads,” she says.

Car shipments will not close the coal gap completely. But they’re up 21 percent this quarter compared to the same time two years ago.

Train shipments fell drastically during the recession, but started to recover in 2010 and have continued to grow year over year. The first quarter of 2013 was 5.3 percent higher than the first quarter of 2012.

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