Union Pacific experienced a 26% surge in international intermodal traffic in the fourth quarter of 2024, which contributed to a net income rise to $1.8 billion, up from $1.7 billion the previous year, as higher rail freight volumes drove record profits. The largest Class 1 railroad (NYSE: UNP) reported a full-year net income of $6.7 billion for 2024, compared to $6.4 billion in 2023.
“We had an exceptionally successful year in 2024, achieving an operating ratio of better than 58%,” stated Chief Executive Jim Vena during a call with analysts and media. “This reflects our team’s effective execution of strategy, safety, and service, leading to overall operational excellence. It was a fantastic conclusion to 2024.”
In the fourth quarter ending December 31, carload volumes were up 5% year-over-year. However, operating revenue fell 1% to $6.1 billion, primarily due to decreased fuel surcharge revenue and an unfavorable business mix, although this was partly mitigated by increased volumes and core pricing gains. Intermodal traffic rose by 16%, despite a 9% year-over-year decline in average revenue per car. Notably, international intermodal volumes surged 26% amid strong import demand, exceeding robust container flows through West Coast ports. Domestic intermodal also saw growth as the railroad attracted more shipments from trucks.
Revenue carloads increased by 5%, driven by a 3% rise in fertilizer and 8% growth in grain and chemicals. Coal revenue, however, continued its long-term decline, dropping 29% in the quarter. Union Pacific anticipates some offset to this decline in 2025 through a new contract with the Lower Colorado River Authority of Texas.
Kenny Rocker, executive vice president of marketing and sales, indicated that grain benefited from a good harvest and robust export activity to Mexico, while demand for plastics also grew. However, there has been a downturn in construction materials like sand and rock. “We’re closely monitoring potential tariff changes that could affect volumes and are preparing for a softer economic environment in 2025.”
Freight volumes are expected to be supported by $1.5 billion in ongoing project development, with the Gulf Coast being a focal point. The operating ratio improved to 58.7%, a 220 basis point enhancement that included an unfavorable 70 basis point impact from a newly ratified union contract. Operating income hit a record $2.5 billion, marking a 5% increase.
“There are many uncertainties in 2025 — from tariffs to regulatory changes and interest rates — but that has always been part of the railroading landscape throughout my four-decade career,” remarked Vena, who began as a train crewman. “Maintaining a ‘buffer’ in railcars, locomotives, and operating capacity has proven beneficial. We anticipate growth in the high single digits to low double digits for 2025.”
