Union Pacific's Q4 2024: Pricing Strategies, Service Challenges, and Volume Growth Contradictions

Financial Performance and Earnings Growth:
- Union Pacific reported a 4% increase in revenue for Q4, with earnings per share rising by 7% to $2.91.
- The growth was driven by strong volume growth and core pricing gains that offset unfavorable business mix.

Operational Efficiency and Cost Management:
- The company achieved an operating ratio of 58.7%, improved by 220 basis points year-over-year.
- This improvement was due to a 5% increase in freight revenue excluding fuel surcharge, strong productivity improvements, and effective cost control.

Intermodal and International Volumes:
- Union Pacific's intermodal volumes increased by 26% in Q4, outpacing the growth rate of West Coast imports and utilization of buffer resources.
- This surge was driven by strong international demand and the team's deployment of buffer resources to maintain fluidity.

CapEx and Infrastructure Investments:
- Union Pacific plans to invest approximately $3.4 billion in 2025, the same as in 2024, focusing on infrastructure and renewal of older assets.
- Investments are targeted to enhance capacity, improve train lengths, and support growth initiatives like intermodal development projects and siding construction.

Strategic Business Focus and Market Outlook:
- The company continues to prioritize business development in areas like renewable diesel, petrochemicals, and industrial chemicals to drive growth.
- Strategic investments in the Gulf Coast region and intermodal capacity expansion are expected to support long-term growth and efficiency.