OMAHA, NEBRASKA, US — Strong domestic and export demand for grain and grain products in the second quarter of 2021 buoyed Union Pacific’s year-over-year earnings.
Net income at Union Pacific totaled $1.8 billion in the second quarter, equal to $2.72 per share, compared with $1.1 billion in the second quarter of 2020.
“The Union Pacific team leveraged volume growth, core pricing gains, and productivity to produce record quarterly results,” said Lance Fritz, chairman, president and chief executive officer of Union Pacific. “Beyond our strong financial performance, we also made progress on our goal to reduce our carbon footprint, which includes a 3% improvement in our fuel consumption rate. Importantly, these strong results were achieved in a challenging environment as our rail network continues to be impacted by supply chain disruptions, particularly in the intermodal space.”
The company’s operating revenue was $5.5 billion, up 30% from the second quarter of 2020. Business volumes, as measured by total revenue carloads, increased 22% in the second quarter of 2021.
“Grain and grain products were up 22% year-over-year due to the strength in both domestic and export grain,” said Kenyatta Rocker, executive vice president of marketing and sales for Union Pacific. “Ethanol shipments also continued to improve as production recovers from COVID-related shutdowns.”
Despite a jump in grain revenue the company was challenged with supply chain disruptions.
“At the expense of our own service metrics, we chose to help reduce port congestion by moving more assets into dock operations,” said Eric Gehringer, senior vice president of transportation for Union Pacific. “But that West Coast port congestion has now moved east and is affecting some of our inland terminals, most notable in Chicago. We are working proactively with our commercial team and ocean carrier customers to address congestion while continuing to sustain shipment volumes to ports.”
In an effort to ease these supply chain issues Gehringer said Union Pacific temporarily reopened Global 3 in Chicago for inland storage and is working with customers to develop additional storage and transportation solutions.
Looking ahead Rocker remains positive about bulk commodities and food and refrigerated product demand as the country bounces back from COVID-19.
“We are also optimistic with our grain products business as ethanol shipment will improve from increased consumer demand and our focus in growing the renewable diesel market,” Rocker said. “And lastly, we while we see positive signs for the upcoming grain harvest and strength in export demand, we expect tights supply in the third quarter as well as tough year-over-year comparisons in the back half of the year.”