What are your thoughts on Union Pacific (UNP) Q1/2020 reported earnings? (Tony Hatch)

Abhbw 2010

UNP operations were impressive indeed and COO Jim Vena deserved the bow he took. UNP hit $220mm in productivity gains in the quarter, and while they did reduce their FY target of $500mm (to $400-500mm) they are confident in the PSR path. Some highlights:

  • Velocity increased (car by 8%, train by 3%).
  • Dwell was down by 11%; train length was up 15%.
  • Trip plan compliance increased (IM +19 to 85; bulk +1 point to….64 – impacted by some noise in and around Fort Worth (stopped humping at Davidson yard there – which I just realized was another Zing! Naming the yard after Double D in the HQ town of the Green & Orange.  Zing!).
  • An “embarrassing” (if unquantified) amount of locos have been parked, many (ditto) at the read/return stage.
  • Workforce productivity was up 10% (on the 7% volume drop; headcount was down 15%, T%E -19% - before the recent announcement –and comp & benefits were down 12% YOY).

And Vena et al said there’s more to come (unmixed in metaphor – fully “half the game” left) – enlarged sidings will help train length more; there is more to come from shop consolidations (etc), IM terminals (starting anyway, in Chicago and LA), local operations, etc. Not mentioned, but still out there, is a benchmarked fuel efficiency gain (to be faiiiir, they improved 5% YOY in the quarter).