Union Pacific's Q1 2025: Navigating Contradictions in Volume, Pricing, and Macroeconomic Outlook

Volume and pricing strategy, pricing strategy and sustainability, macroeconomic uncertainty and guidance, service product and pricing strategy, operating ratio and revenue expectations are the key contradictions discussed in Union Pacific's latest 2025Q1 earnings call.



Revenue and Volume Growth:
- Union Pacific reported freight revenue of $5.7 billion for the quarter, showing 1% growth compared to last year. Excluding fuel surcharges, this revenue increased 4%.
- The growth was driven by strong core pricing gains and significant carload growth, especially in the Bulk segment.

Operating Performance and Efficiency:
- The company's operating ratio was reported at 60.7%, flat compared to the previous year, despite a significant headwind from fuel costs and a leap year.
- Record improvements were seen in safety, service, and operational excellence, with freight car velocity improving 6% to 215 miles per day.

Pricing Strategy and Market Dynamics:
- Union Pacific achieved the highest quarterly core pricing levels in the past decade, with pricing dollars net of inflation being accretive to their operating ratio.
- This was supported by investments in service quality and a mindset focused on selling service value.

Challenges and Uncertainty:
- The company acknowledged current market uncertainties affecting certain segments, such as International Intermodal and Automotive, due to factors like tariffs and trade policies.
- Union Pacific remains agile and maintains a strategy to deliver strong results, even in the face of a fluid situation.