UNP - Earnings call transcript Q3 2019 | Union Pacific Corporation

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Operator

Greetings. Welcome to the Union Pacific Third Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

conference are recorded website. available this for the reminder, presentation today’s on a is and being slides As Union Pacific��s is to pleasure now host, It Mr. introduce your my President Chairman, Lance Union CEO Pacific. Fritz, and for Mr. begin. may you Fritz,

Lance Fritz

Union newly-appointed Thank you, Rob, asked Kenny today Chief quarter good Sales; Knight, our morning, Officer Chief Rocker, Officer. me Executive conference With Jennifer Omaha of Pacific’s Officer; Marketing Jim Hamann, welcome call. to and Operating everybody. also our the earnings call. Xst, in third And the and to and are Vice President Rob January Chief for Q&A Financial of I effective Financial us have join portion Vena,

service I to the financial Rob’s well-deserved much, Pacific Union started been before wish Union him of moment particularly in a and critical over Rob. member of get driving in senior team his So XX-year instrumental his last you take CFO. contributions want success. very as We we and XX years career, was thank to and best today, and a the his for thank Pacific’s our all retirement Rob upcoming

working I Rob the I to role. the and to great to welcome lead are choice right am into and through job future. doing initiatives the also She transition the confident that a is CFO Jennifer like would Jennifer financial our

third net X% represents of income income a quarter XXXX to net $X.X $X.XX reporting share is increase X% a This compared Pacific in a in or Union share. morning, earnings This decrease XXXX. and billion per

the percentage at third a to point compared ratio operating Our came X.X in XX.X%, quarterly quarter of XXXX. improvement a

consider beating when record low all-time an That’s last fall-off the volume previous represents our during you in quite established an quarter. this quarterly operating quarter. again, ratio, achievement the Once

as our reliable are part GXX forward for doing work our additional Unified improvement shareholders. our customers. our We both XXXX Plan is going producing safe, The XXXX our of and the a are X foundational company’s through and continuing opportunities to drive there employees consistent Plan customers and and service efforts, to productivity which + are also are Unified for product success

will to turn our provide to results. on it I that, With Kenny more over details

Kenny Rocker

and Thank you, morning. good Lance,

down it core net as of positive it while our group third than we service in our Ag ensuring in marketplace the quarter, Products, was return. pricing Industrial quarter by an price volume and generates the a we gains business declines the value offset continue were the represents same our X.X% product generated X% as to to Premium more Energy. At time, For in in the appropriate

revenue offset the Freight X% was a in partially decrease revenue down improvement car. X%, by in per driven average volume by

Let’s take the a each business at performance of closer look group.

were revenue Products, improvement and in average Grain by reductions for per Ag in continued export X% with were car. carloads X% down revenue on a the X% shipments, a volume decrease quarter X%, partially off Starting was down potash. demand down offsetting biofuels in carloads due declines driven grain primarily feed soft as offset exports. for X% products with for flat strength primarily products sustained demand by grain Fertilizer and global reduced was wheat. Volume and for in was supporting grain sulfur to

related to volume. declined a sand average long-haul volume mix as with X% on of was to Moving loss decrease per coupled down the revenue XX%, revenue Energy, in with car XX% negative

of softer coke the local down gas volume down sand. XX%, export prices demand. and were to market Coal lower due was due and to XX%, natural conditions weak from resulting carloads Sand largely impact the

in volumes the impacted also retirements quarter. and changes contract addition, In

renewable in the the LPG, positive spreads a petroleum, oil on an in oil and carloads was crude increase note, for XX% primary crude the However, drove which quarter. favorable shipments, for price increase driver

increased volume per car shipments. for demand X% short-haul X% in X% business. Plastics driven decrease mix Industrial carloads with south XX%, market in Construction a and volume to in rock revenue on revenue increase the increased increased strong was down to average by due a negative primarily X% production. a due higher

paper softness product decreased markets. Forest the and driven lumber volume XX% by in

to was improved decrease abundant an for volume the quarter X% driven volume, per by revenue XX%, Domestic while during down X%. average XX% quarter. demand the revenue by on with coupled declined primarily Premium, Turning car supply truck intermodal an in softer

seeking XX% and conditions market reflecting International uncertainty, challenging intermodal by tariffs, year-over-year accelerated during weak tariff volume was September comparisons, in XXXX. escalating to trade shipments down quarter, to related avoid driven the

And X% finally, quarter. down vehicle for the finished shipments were

did demand. vehicle quarter Third fully light were sales car SUV offset from sales not Strong XXXX. and U.S. auto declining X% down approximately

for Looking in ahead due increase in demand, challenges of shipments continued marketplace. offset help which advanced and ethanol biofuel in the strength the rest feedstock anticipate an will to XXXX, for Ag we Products, associated

also those we as long-term expect some hope with And see business. furthermore, stronger food to Products, more shipments We along outlook growth of relief penetration multiple China exports with segments beer take to with refrigerated and Ag across our resume. recent the

keep will we to our tariffs However, Ag a eye on watchful foreign market. within continue

positive For the products. to price volume, oil results should improve term. comps Energy, over drive expect Local to favorable sand although petroleum we impact supply for spreads the crude long will continue

year experience also always be for We factor key coal volume demand. throughout and coal challenges the weather expect conditions to balance with a the continued of will

plant starts construction coupled anticipate increase softness year watch overall we in this housing and largely driven in projected the strength the continue online to continued in shipments we market but by market. with coming South, later in an Industrial, the expansions at plastic Looking the

And down from for for light XX.X the lastly, U.S. units, X% vehicle forecast sales XXXX. Premium, XXXX of about million

and encouraged impacted quarter. watch Motors strengthening, volume by volume sequentially close and expected it remain impact. fourth Domestic Intermodal autoworkers, compared a when to is XXXX, by in is on keeping between to still the truck be General we agreement are associated we the but it their the competition Although, tentative

XXXX. seeking to avoid international In seasonal expect flow to shipments to comparisons increases tough but intermodal accelerated in to addition, year-over-year we return normal its tariff face due

And now, I to will Jim. turn it over

Jim Vena

from finally think quarter I clean we what Kenny. a a is had and perspective, results weather you, possible. our volumes for speak Thank Well,

seeing a our continue Our better metrics improve product customers. operating a service are to and for we result, as

Furthermore, be how the rightsizing significant the responded the challenge of I to more while of productivity. couldn’t face our declining in driving team structure cost volumes of proud has

achievement. XX% an XX.X%, quarter starts For down the and Unified were in X% quarterly was outpaced Plan carloads best along example, which our a the This, drove with crew decline ratio experienced. operating XXXX in actions we truly remarkable of all-time

While we safety. are these aren’t overshadowed are we productivity, improving gains drive if to continuing simultaneously

always getting one experience has incident but as Our safety better, at job we are committed Pacific. to remains not improved, Union

I’d over our on like performance six to update XX. now indicators. turn I’d like to you key to slide

We continue our substantial metrics. year-over-year to in see improvement

In that. of Unified we fact, result would blow is we and earlier XXXX. part doing relentless just reliability this by our some as of focus year, direct service improving of a are It goals network Plan on and I said, efficiency our

asset compared XX% in freight quarter fewer improvement led utilization car the to of improvement in improvement XX% freight Continued and XXXX. to in dwell and velocity a classifications car third a car terminal

October. and XX.X Our for to train turned speed We the whole trend continued into per as in to has corner a and XXXX. the the decreased year-over-year improvement saw September miles third compared hour quarter X%

have by as daily mentioned to Unified I be being additional performed events our work speeds affected of in Plan As train the part continue past, XXXX.

more an us work work and and even train opportunity drive to faster size is increase utilization, While there execute these these events helping speeds. drive asset efficiently are events train

Turning units. to more quarter, versus us productivity XX% park year XX, enabled to to our use locomotive from fleet continuing second as slide trend efficiently improved the efforts last the

increased X,XXX X% around had our we XXth, by XX% locomotives September of year-over-year. a in decrease As workforce stored. levels, productivity Driven workforce

addition freight lower productivity, In delivering dwell. car a improved velocity and driven to compliance terminal importance of trip team, increased great service equal the product car year-over-year by to points XX improving is

progress, we expect to While our service improve going our we are product with pleased forward. do

improvement In are October. we in sequential already fact, seeing

of network some By to for hump changes Slide we Plan XXXX. have we to increased work Unified part surrounding our XX resulting in business. at highlights car operations made are manifest yard Roseville terminals as recent associated classification able shifting of reduce velocity the

in moved Alexandria, work Louisiana, operations In addition, in to the reduced a our Livonia. we efficient more switching at terminal yard

We also stopped at cars yard humping in City. Kansas Neff

will existing network the now the a build blocks overhead into drive leverage Complex. deeper we switching City Kansas in cars As terminals and flat result, to

we network. for undoubtedly ways which look lead touches, reduce on to opportunities continue will forward, car our to rationalization will to Going additional terminal

By areas this main across XX% our progress putting on increased graph the of utilize our length feet our product we fewer capacity, more over a thousand and illustrated of length focus trains, on one is train network year. train existing on since right. making are January of as by the Currently, or have by system to this excellent we front

and they productivity year, Through collaborative investing paying our for that initiatives time. was Central, Earlier specific In completed Sunset and corridors Sunset, dividends. North-South extensions on in initiatives. network against up effort, we fact, the record our support work team to have in siding this big discussed capital Corridor a we are

report I to Sunset As XX% a am result, has January XXXX. the train the since Corridor length pleased increased in

Corridor train the length year. XX% Furthermore, South driven changes since North-South up in our have operational and Chicago between over start Texas the of

length plan forward, combination see of changes improvement expect in train Looking a investments. targeted through transportation continued I and to capital

XX, to operations been results To changes the year a have and the wrap on we made of slide in up, have last number our outstanding.

safety, asset opportunities of network utilization still further are ahead lot and to a efficiency. there However, us improve of

team us to for pushing both envelope as is bold efficient we continue reliable operation, for our and railroad and we steps and that and shareholders our running forward, the As to look customers happen. safe, transform a making move taking our nonnegotiable, committed is our

turn for I Rob will over that, last with And time. it to the

Rob Knight

of Pacific ratio Today best to and an XXXX. earnings Jim, XX.X%. This + year-over-year operating quarter great again and quarter are in share once ratio operating quarterly third reporting is a improvement we and are our a doing GXX consecutive with of morning. all-time a X.X $X.XX and the the for that represents Plan operating Thanks, testament points we Unified ratio. Union good work to with X sub-XX% This second the per

were stage. set by jump before some let so one-timers, Our details, affected quarterly the I results me into the

of equipment of $XX third XXXX. point frequency our the a added cleanup, resulted resulted increased quarter for excess and in damaged freight the $X.XX in in impact compared operating to of and costs X.X rail These EPS negative million destroyed subtracted approximately ratio operating of expenses quarter. An to incidence equipment

fuel ratio impact price despite compared last our almost margin quarter volumes, of to EPS quarter good the The adding we impact X The points of news and on improvement the for $X.XX third lower combined core X.X of the of had a to surcharge XXXX. compared that lag favorable points year. drove is fuel of operating lower

totaled totaled the partially $X.X our costs an in $X.X lower other year. up increased billion, down X% recap third driver X% to primary X% down $X.X billion quarter quarter, driven expense year. compared a was from the billion, versus volume. let’s benefit Below last XX% decrease and in offset Now $XX revenue last results. rental was XX% from plan Operating income, decrease million, Operating income was by line, Operating higher by environmental XXXX. costs. income XXXX The

million expense impact reflects compared was to Interest balance. previous debt a total of $XXX up of This the the higher year. XX%

expense to Income decreased $XXX X% tax million.

and effective XX.X% effective the around tax was Our be our rate XX.X%. annual expect year rate quarter full tax we for third to the for

balance $X.X of down billion, continued decreased our year, last share while outstanding income totaled result repurchases. X% a X% as share the Net versus

XX.X%. I per share $X.XX and to earnings quarter combined these results earlier, of operating produce an As of third ratio noted

business last by $X.X agricultural almost driven quarter, year. Business somewhat totaled product to of versus negative surcharge billion XXXX. a in reduced X% with impact the intermodal had million, revenue sand third point $XXX mix million and on X increased revenue was by freight Freight compared shipments. Fuel $XX down rock offset decreased down along volumes, shorter-haul fewer revenue carloadings,

achieved third half X.X% pricing similar first of XXXX. we Core price the was quarter, to in the that the in

Although, yields not this lower, any actions. slightly pricing are of reported the indicative is quarterly

the which way many third believe in quarter, right impacted to negatively have yield. have you price price the price, heard volumes. to the is volumes fall-off get me before, to our in calculate As move under order we say methodology, times In you the our credit for

beginning report quarter pricing detailed fourth numbers. that, said no Having with results, we our will longer

the is detailed We this us railroad the believe marketplace. Pacific Class publically results, to are report commercial in change we Union X disadvantages now making solely for as reasons pricing which only

becoming This Pacific should less way in on less read not Union focused or disciplined be pricing. as any

achieving pricing play unchanged, will our guidance and rail Of course, price assured, to and in our we continue inflation role our rest goals key dollars continue will above a costs. to financial is yield

quarter force benefits expense operating decrease total our reduction by a a the year. XX% our quarter. FTEs and Productivity Compensation about which Slide versus lower of XX% to the -- down workforces with while summary XX%. initiatives versus third were The or along primarily decrease our billion decreased management, in core XX XXXX. a expenses resulted provides engineering of and in levels, X,XXX together for workforce, in declined XX% our in driven mechanical volumes last was TE&Y $X.X

Fuel fewer to efficient decreased $XXX compared gallons to fuel down XXXX gallon XX% and lower versus per $X.XX totaled prices million, last diesel to through diesel rate consumption our prices fuel expense XX% X% year consumed. Average and more improved operations. due

by costs reduced down X%, quarter the drivers repairs. to contract of the decrease $XXX less compared Purchase materials, mechanical of car were third services and million. in and XXXX materials The and the expense foreign was services reduced offset quarter repair at partially primary

$XXX compared million, X% expense Turning up was to XX, XXXX. slide to depreciation

we year expect that full still to depreciation be X%. expense will the XXXX, X% For up

other is The Moving by in and lease costs. was $XXX which compared expense million when less down driven quarter, totaled primarily rents. to decrease expense volume to XX% related This lower and the equipment XXXX. equipment

down in equipment. costs the driven million, $XXX Other lower partially by with damaged destroyed expense of increase XXXX by X%, at expenses associated compared third offset freight an was quarter environmental and to

For other the full compared to digits expense year be to low-single XXXX, we XXXX. expect up

remarks. X my from partially Plan and additional initiatives GXX that savings + by million approximately quarter, in Productivity in which XXXX mentioned our the the totaled yielded costs $XXX offset was opening I Unified

environment. net year-to-date sitting $XXX flooding and now at was As remarkable have third volume we is the a outcome about quarter with think for the as million, you million. when This challenges productivity result, such a that $XXX net productivity overcome a unprecedented weak

in with continue and In deliver traction productivity are productivity to our at XXXX. of that initiatives net million still fact, $XXX we least we confident gain will

billion operations compared totaled quarters Looking before totaled cash for equal down dividends billion, flow, for year. conversion cash flow from resulting cash XXXX. $X.X three the quarters first net the of at free last XX% three $X.X our flow rate first to to in slightly cash Free income of

look balance $X.X the at quarter, the debt of finished year the X.X the levels, debt adjusted totaled XXXX. an since billion a Taking at quarter third third debt-to-EBITDA adjusted billion end adjusted up $XX times. end ratio all-in of with We

X.X As we have previously guided, is to our times. target for debt-to-EBITDA up

effect $XXX This XXXX. year. first totaled $X.X payments the billion, more increases of third the of in first for dividend quarters XX% Dividend quarter three and both than up quarter from million includes the this

quarter, During a the of third we at repurchased cost $X.X X.X million shares billion.

the year. of X.X between We quarters initiated February. this we our returned also quarter associated the shares dividend the payments program that repurchases, in repurchase in to billion and in billion three with share received $X.X of million the we share $X.X first third closeout shareholders But accelerated

level Looking experienced rail in a the the out similar uncertainty the to in third at volumes what of to XXXX, to the in the decline quarter. current underlying economic remainder with marketplace, expect softness fourth quarter volumes we year-over-year and we

more with our we product and additional reliable to grow are business. would poised we volume, love to consistent a Clearly, have service

Going represents in to appropriate well while continue initiatives from the service our to return. costs forward, will it XXXX. We the rail value in generates remain it confident the price an marketplace, again pricing our inflation will that ensuring exceed dollars that we our yield we that

$XXX full expect $X.X capital year less investments, be previously or our XXXX With around we billion now respect million to $X.X billion plan. to announced about spending than

to growth have of some light initiatives, support Although, Unified current spend we capital business we volumes. XXXX scaled back the are projects of in continuing invest our Plan that productivity in

a resulted our and degree lesser strong lower workforce, As a have to year-to-date reduction. in productivity volumes it to X% initiatives relates

of operating expect XX% lower business to the combination least we levels year, be should levels and gains force continued the For balance in efficiency quarter versus of result fourth XXXX. at down

full-year XX%, result, going levels positions slightly than XXXX. a more down nicely As be force should which us into

our volumes. operating lineup year gives productivity us guidance half sub-XX% the next in despite on of full at look XXXX. our achieve below Importantly, early ratio the Furthermore, ratio intact, XX% an for a a operating an the basis ability in remains confidence, second year’s with margins to in year, XXXX improving of with fall-off

many our As comes when to that assure moving to times have dealt of unwavering before, our achieving improve are volumes. you me have play it to heard commitment me targets are is But economic let the we we we environment. say hand you, aggressively to the financial and regardless

one Lance, for back to Before me I just can indulge it turn you minute. if

safety, this in Pacific earnings dramatic results Union and last As my and all said, was is the financial call thank want men of improvements over service I for the years. final and women the XX to

proud our team over to over operating $XXX great improved our will operating market have am that to confident results continue the time billion cap ratio. that as and increasing we I points, am that ratio drive XX very drive XX I by we a

that I I CFO. be the the have me have that to about on also support will you given and an all I are like Jennifer today never and operationally that best. finally, listening felt would for know professionalism everyone I thank Union you wish And and better outstanding all and Pacific the we path

it With I Lance. will turn to that, back

Lance Fritz

Thank you, Rob.

we today, product strides quarter results to productivity we of and delivered and improve our as solid service made Unified As discussed tremendous part third Plan financial XXXX.

forward highly product consistent look on provide we and to successes and we XXXX, customers. our of service remainder reliable the for For building our a

just greater. there operational has confidence in looking the some been Rob capabilities, our unknowns as mentioned, economy, Although, are never ahead at

and on excess communities dividends cash railroad driving railroad appropriately our We employees the repurchases. and in work we do long-term shareholders our a share investing and returning through some to by always, to have shareholder we remain value focused and As operating we are the serve to committed for that there. squarely safe

for questions. the With your open let’s up that, line

Operator

Thank question And Instructions] proceed [Operator from you. our Long with Justin Stephens. question. your Please you. Thank comes with first

Justin Long

throughout Rob And hold start Thanks. announcement. the that the look quarter reduction at this Maybe start on steady, to seems X% in exit and just things dependent, I and I a or you rate implement the somewhat take next that in we Good know will to headcount, Jennifer headcount opportunity morning. a hold the minimum should congrats you but beyond thinking about to be year, headcount next sequentially reduction fourth another year a for on X% we if can so the the as XXXX, the to and level just you guidance continue it’s volume flat PSR? with and if in for just at speak to it imply year.

Rob Knight

Yeah.

Justin, this is Rob.

We so are volume will will headcount we a we the what are being, is volume in positive, haven’t XXXX efficiently hopeful standpoint. role finalized actually up we that very grow and our in have plan, that ends that obviously and and a but productivity confident from

very a you we that, said at are Having are level. efficient right, exiting

momentum are Rail about. We that gaining talked initiatives Precision with Plan the Jim Unified XXXX

we think about I are thinking exactly not number, is directionally, but guiding what thinking. So, directionally we you that to it that are are right,

Justin Long

maybe XQ couple is Last quarter. year years? OR we Okay. cause of question. flattish of sequentially that that there of seen could trend the be seen staying couple Should well years, we about divergence as a past have OR the flat from the something or in near-term in this have we quarter And secondly third sequentially then fourth a of more fairly to thinking stay

Rob Knight

Yeah.

thinking quarter. guidance think the and right which that, the early a also We in are you at on in decline to I not I sort think on what the we about similar would are gave fourth that expect I see there of be but you an saw it quarterly front, look volume third we giving quarter directionally

there’s unusual outside So of that. nothing

do the good to implement but initiatives it Unified are going and obviously Plan you are continue as to can, we thinking about right. directionally We as XXXX

Justin Long

the Okay. Great. That’s time. helpful. Thanks for

Lance Fritz

Justin. you, Thank

Operator

with The next your line proceed the question from of Wetherbee Chris is Citi. with Please question.

Chris Wetherbee

wanted working I morning XX% in fourth the best all headcount Good dynamic, you. Thanks. to you quarter I to you has the make great when and what think earlier Rob, dramatic guess and from I back of to in it’s argument when Jennifer. with you the Wish is Rob reduction I set this volume target perspective, that congrats you we the year sort obviously certainly your a XX% number. a and Hey. can guess retirement. come an sort been volume decline big about big, guess. of to disappointed have a relative for seen

kind feel balance slightly coming what XQ hopefully guess, bit you of as headcount there and do your the more this of to volume how sort between I little a a of kind we am kind bottoming kind bit an from Justin, question, Is a So, XQ, aggressive through to we there volume? opportunity resources Is are but perspective? different. little of of in on go I similarly about seeing opportunity, get this at the

Lance Fritz

little Without Yeah. right? a fine the topline largely Chris, the on we came have into were putting point the see this answer in we when short it, We is is yes, disappointed a to Lance. what really hoping been versus year.

volume. result, a drop match adjusted in As that aggressively headcount more have to we

happening that technicolor than volume, of some will we the the see see expect Jim, you a to lower as operations? You I we continue opportunities in do and had add of that little want you headcount that. terms the in third quarter in

Jim Vena

team able of to this into speak what do to taking going numbers ended themselves. same think, we job react, are I Lance, volume were we did the up account the the for and great think quarter a I and the where thing.

business volume to the on are model. goes the it, react any going the people we But right up. sequential and -- that forward number react see a drop We the of we of volume. in in we Hopefully, against as the flat will end way move we have line to at

Chris Wetherbee

Okay.

appreciate we dealing little talk deterioration in bit about I the sort their mix a from mix I specifically. can you way out yield and markets, around the with we topline dynamics Can pricing competitive to standpoint, the XQ, Is to any some working through? here. of of little the that. be guess are predictability of maybe you dynamics Can helpful. a look bit of helpful or yield are you as about maybe that very your sequential there kind those that that, and then would sort talk but That’s Okay. highlight some XQ kind a and environment of yield

Lance Fritz

yield. said over Before that I quarter, I in on Rob, that to yield in ability that, again, there to, X% about XX% so pricing conservative was environment to the just to we yield get turn this, to impact specific Rob most way, the generate And it Kenny, in you calculate an want had bit. everybody, has said want right But our sequentially when very specifically remind volume are that a just it nothing drop in you or little Kenny, significant quarter real decline you drove and a a in talk that the with now? the do

Kenny Rocker

really there. all, of strong to product just to operating where shout service a can to we first price out creating team give I want environment an So, out a Jim, the for wishing

keeping So aligning our pricing service is good that’s doing and offering improving. discipline team our commercial that of a really job with consistent price

there. said competitive is environment a all there is very that those Having truck out things,

of I -- compete think and North in number daily place carriers we the with rail a all of what’s of you America. taking complete are aware marketplace in

expect discipline to that going we maintain as us the and to grow. to thing help But our hear pricing for important improving I that as are we is service also products think that is service product especially improves, you

Lance Fritz

want you mix? on to do Rob, touch

Rob Knight

reason that know, Yeah. mix guidance is we within the and have diverse we product Chris, such for we on give mix that don’t as have mix a mix. you

I shipments of everybody times. mean, gets largely think shorter-haul You bit on everybody shipments in of surprise third the the quarter in a Having intermodal, shorter-haul surprise we have that the mix. Most and the moves perhaps said that, I increase rock say some heard explained mix kind the like that the perhaps, other increased was me many that. that to out. think that. gets think, challenges, some, were called to by I the a I rock The of little Ag

from saw from that, am said wouldn’t away I in directionally materially guidance, third why mix reason the looking would Again, to but would -- no fourth similar. Having we stay I different going quarter. I see be the quarter what envision it specific

Chris Wetherbee

Okay.

I Okay. much. That’s helpful. Thanks it. very appreciate

Lance Fritz

Thank you.

Operator

Please question of with comes the Tom next line UBS. with proceed question. The Wadewitz from your

Tom Wadewitz

And Yeah. also you it’s volume best, as see, versus coal mean, there’s wide there congratulations, in looks see The you BN the four-week obviously you there light about in well. -- could Pacific side on a the weakness the a performance well, let’s I driving as parts XX%, down be the a what where in about Rob, yeah, I and X% Good Union the with wish big morning, Northern. volume. intermodal am volume pretty and over and you delta Jennifer. Burlington notable to that, it to congratulations just pretty wanted that if is think to lot you like years shed moving kind trend, I working for are in gap the might some particular, average referring is and pleasure of down of But moving are

that some you if what’s the over that on think quarters? wondering and couple driving change next whether might thoughts offer just you So could

Lance Fritz

Kenny?

Kenny Rocker

economy seen lot American compete tell have stronger western carriers appreciate. competition North the on intermodal is that trucking And out Yeah. both rail always, opportunities. But we side, product and strengthening appreciated carriers. a the yes, would I have and is for to with the rail there as will us the of you help that we that we more from a the something side the we actually compete fact service

there. continue has that going and So will to to be around for compete us we

Lance Fritz

trend would is product and service the Tom, add, thing are that very with One we I our Yeah. it’s happy that on.

itself good be very to a and currently I service consistent, reliable improve. going and it’s think product it’s to it’s continue to showing So and

place that compete in So business. basis, from for to great a we are

be Having said very, also that, a continuing we very price. our to disciplined on are

as price not service So we on we will truck, share, we truck it economy compete down And of will some trying we advantage great will are tightens at strengthens, are that. will to as chase provide, place point, at we the the trying and just that. chase take against point up, that market which to some we for market are capacity based loose the which in and not to a it

Tom Wadewitz

Okay.

disruption of I there big that side further, PSR the intermodal in you contract and PSR? But Just, hope in obviously an there guess on in shifts might follow-up are disruption little and run from of initial I an account that to bit or you the better as that the to a example, make customer impact, guess then Chicago, using to coal can for sometimes is you terms part cause some in and terminals initial kind to, impact changes you of the from are the contracts but future.

Jim Vena

I There a low The it’s business. asterisk. terms mix density to that, design sense. on volume our in in of questions. that Yeah. Chris, really entire you of It the an is That intermodal the volume lanes, of up impact And still intermodal largely network from answer small has space. of take rationalizing railroad, back low book sense made aggregate in the short lanes. makes will been single-digit when

out again precisely. -- talked we customers, we this other this year it did contract contracts, think, any haven’t the a and mentioned but contracts talk When degree impacting other question quarter, in hands Kenny change specifically we we about have coal about don’t call parts is that, both that but the to and quarter a about of did first I you into I get your

Tom Wadewitz

for Okay. Thanks time. the Great.

Lance Fritz

All right.

Operator

with Group line question questions. from Wolfe next Please Scott proceed the is with of your The Research.

Scott Group

Hey. guys. Good Thanks. morning,

thought, sequentially little be some So and the I next just have side, to rail would And thoughts want thought a services the then left there, ask how cost a on PSR. would can talk per inflation and were on given that going weak higher we comp you there the flat volumes year? on cost? about forward purchase opportunity model that services to couple any maybe opportunity than purchase is employee

Rob Knight

Yeah. Scott, Rob. this is

of in that which The rose, per the on the why -- cost little employee. up of that changes of bit. what up going overtime would to was a something take inflate you expect lot of overtime me is above Let per was if did operations really as some in kind we it terms the employee inflation a cost the but delta,

I of look to be As we planning for is say, the in finalized range again. X.X-ish labor XXXX X%, but would overall our again with probably haven’t in assumptions we it’s to the probably neighborhood inflation going yet, XXXX,

well. on guess rationalize efficient the Unified I we there pursue we as And Plan continue us the line as to wouldn’t think XXXX unique purchase services, will I obviously, be out as opportunities initiatives we on to and call there, as can for be that anything

Scott Group

if got Okay. year. OR And Jennifer or guidance ahead want to that. sub-XX is the the or for maybe you well next of then Jim, street already Rob we comment,

or does asking a bit then -- seem maybe reasonable and the Given it macro, that differently. little

better past PSR, seem rails the Does So or when at that of about year doing second first you like instances than reasonable looked margin have way not? have we in to a seen improvement it year. the think

Lance Fritz

Yeah.

to over I and will then and Rob Scott, it Let Jim. hand me start,

we is we to have have as the be. next year sub-XX, be sub-sub-XX can said we So there but are possibly out got going bottomline constantly guidance as we for

very enter next would get a we got from we the be have If As good that helpful. year, right? we momentum, economy, little cooperation can

some and had year. this have We puts takes

We we will going Rob get And as in. have know with XX those can. of possibly over I we Jim to the so what quarter, we through those are. it fill and discussed sub to to are that, turn But as

Rob Knight

step to have. would to the and as we tried can, years that, efficiency the on get as we that efficiently Yeah. always have of we every add and and quickly there frankly ladder Scott, had know, I safely that you over have just as we

have that’s there. we the say to similar numbers that out would I So

have my as feel comments, I feel, as said good I as felt I I where my career ever we are operationally. in in about

we So the I like control extremely can to good get sub-XX, feel I things about. that feel that to

the and variable thinking the still an today, volume the right on XXXX of will at economy, right ledger, side here slightly look that now positive maybe as to as be that’s really certainly the and hopeful I the So we on we but is this are unknown point. the sit

I can that big year. guidance how think sub-XX sub the for that’s as be So sub, next to variable on really

Jim Vena

view it. add, thing of have think, I are macro only great and done Rob just Lance Operationally, the I giving Listen, job can the of a we starting.

I think, to there’s do. lots

a ago. been of couple days think, nine here months, for I have I

has deliver metrics real the it I think the you what key. team in able to are and been see that

know, I don’t I think, think I -- going be a great next year to is year operationally.

we what will and I excited team do, properly. forward if a in can it’s increase. and of not, lots coming react and year substantial by and will next to for I end headway this increase I an Kenny, what it We this Hopefully take see And see am the whatever business. of show business, we year.

Scott Group

productivity the I just of beginning year with you at laid can a thing one labor the out Jim, target. you -- you? XX% clarify So,

getting on out, getting so because of a the but like, headcount labor are much, productivity. maybe of we volumes are that We down are lot half

left imply that that next are about we right? a big there’s does So thinking opportunity that year,

Jim Vena

the right I think, direction. in we are headed

right. You are thinking

the the we train put more it move City, ahead, more we trains, productivity we drive Kansas like -- that we better, Scott. efficient, in just more product adjust will are on we as We make can starts, did improve the our less see put, yards

nothing you way wrong the thinking. are with So

Scott Group

Okay. guys. Thank you,

Operator

Ravi of Morgan comes the question from Please next Shanker Our your with with Stanley. proceed line question.

Ravi Shanker

Rob, Jen, congratulations, And to Thanks your luck well. on everyone. as and me retirement from good

that pretty price. was it announce going So to no you longer core are

ago, have that That’s key the that X price, think? a disclose dramatic that’s more Why I price. Class changed, of to that of I pretty do pieces. where regulatory kind get competitive because tougher gotten every Why it’s was from think now years or as to years that is environment? that bouquet kind six is doesn’t five change because seen rail rail mean, you of do you shift investment just think a it makes you

Lance Fritz

us. I ourselves trying mean, simple can’t us. other customer that to publishing as works is the discussion, for way, speak It’s maximize price work yield I simplest against talking a to And as number We So is by every and can that for I Kenny in when commercially. that our frequently that conservative Rob? in conversation. us speak calculation against a yield for quarter. railroads.

Rob Knight

as also Lance just a I impact that I I comments, would shift. said have it in Ravi, it, Yeah. better add, the think, financials. and I my nailed as would is understanding but felt you understanding the never about are exit on company, But pricing our the I add, right, the I has of value

with mind team it’s earn marketing you my the And that drive a we and the doubt there’s can understand objective continually combine our positive service and returns in adequate completely to that improving as product, no the in that Kenny the price that marketplace.

think assured So don’t is, that rest that commercially pricing have talking we to as our after to mean price, because pursue not guess, and precisely there to that, which opportunities, rest about we assured, going we to aggressively not think point I advantage aggressively are as be are we that. we still going are interpret it’s the

Ravi Shanker

it. Got

Just think, that, after Lance, and I not going share price. chasing very a earlier you follow-up. volume you are said guys clearly over

there regional you the the volume quarter competitor, chief feel of on between do of going in Just this is and delta your you marketplace? some like given that some

Lance Fritz

but competitive against space it the every competitive it Our marketplace, remains not very intermodal specifically to truck remains as and against just competition, quarter, in you rail specifically relay we competition.

pretty is widely are capacity that the which pricing loose has means available right now, Trucks and reported dropping. readily truck darn been

and seeing are of then bottom a to we looking upturn. that So forward an

occur. and to competition truck down, will look you I as substantially starting we all don’t turn that anticipate negative for But you bodes I well forward. that see orders see know And when. production

Rob Knight

best are is now. an improved the to and product And way combat service right we getting that’s what that

Ravi Shanker

good. Very you. Thank

Operator

question with line from Please Brian of comes your Our Ossenbeck questions. the JPMorgan. next with proceed

Brian Ossenbeck

Jennifer. congrats, Rob for Thanks morning. taking Good Hey. the and question, again, and

easier, comps volume for mentioned continues that? long-term expand Kenny, comps that You time, we some a is maybe get to we still honestly, about? that And minute, easier wanted activity about to sand a I of Just but for down. mix well? talk surprised up headwind been in What maybe going going a I such is levels the feel, have can truck, so do that’s go then coming little the have help factor, in as when be big you on a talk XXXX. to absolute sand areas while you here think the it key you that’s and local am see shift a the back about to side there to mentioned long just you just a

Kenny Rocker

Yeah.

of I talk plan us the yeah, be the for So, ledger. first of year. positive the would the that to all, it’s on about for we expect following side would a But, slightly little premature

that towards out. the we the fact we As helps product good us a service look got and future have really

sand that business, penetration sand good XX now over When tell local yeah, months. the with time. has at slow to been you that would I look a for us expect those you I that comparisons will

for the So over comparisons near-term, certainly should, easier it the immediate but should maybe get not longer us. term, those

Brian Ossenbeck

to on in here overhang because little didn’t follow-up get of feel bit I hear tight, like an some cycle you much to benefit so the a when the side, then of surprised And markets? as was the that trucking it’s a

Kenny Rocker

Yeah.

market. on an the keeping are trucking eye We

the it months last we weeks, firm couple are and little couple Over seeing the last a bit. over even up

because a there appreciate in would keeping of out the really also help will eye there are what But and domestic business. interplay our our We happen between we peak some terms overall business international season an from more right economy. on is now,

Brian Ossenbeck

different just up, probably just us Thanks. your of a and Got kicking year that little and quick generally? necessarily you labor with it that. wanted negotiation want we on get perspective. of Can it. But are which more see, certainly to lot there’s areas movement give I more on just have end starting active, lot not between active a feels for you I since the can’t that’s the one we Then Lance. view on like here, still a now But from do seeing say environment one in you thoughts it’s regulatory few much just too appreciate your than off coming topics a just

Lance Fritz

Sure.

So let’s them with start I in take the will environment. pieces. two regulatory

started of cases that the new five have not of poised they with old getting handled on years Board the over distant on course they So to be host last items items. the weren’t fully either just already items more too docket future. And staffed in active a that members the STB pursuing, some the in and five are is

its continually of could with and negative the impacts help what regulatory forms It some be a can’t posture that of regulations regulation we taken mosaic that Our the own. them are of considered really is engaged impact. some understand on them are STB being each the be help of to understand also

the railroads and that infrastructure is to can healthy in have the United And invest to railroads States. we the that STB for a continue capital robust the support to so game the for are end the make sure railroads

railroad. dialogue and good is? the we considered. What are How communication regulations the that are are some working what of risks the state having being of constantly current are product about of So service on? And we the

current or specific That union moratorium negotiating In through X. of to The the I of TD. end Smart there is you terms to courts. as negotiation addressed consider arbitration with item. did -- that at the against look that being negotiate technical That crew through see that least labor, November it a compel was a and that consist was matter our to lawsuit a forward filed was on it’s the

management is around anticipate happen. the to negotiating railroad for free and economy. our that’s position work U.S. So going of it’s that, on to time be and unions. to competitive a I to robust with strong sometime I season forward as railroad negotiating anticipate frame, a are be unions put Pacific going to demands and forward free I look to that unions to teams to I demands look the continue Union supporter put on to management able

Brian Ossenbeck

Lance. Okay. Appreciate you, Thank that.

Lance Fritz

Yeah.

Operator

Bank. from Please is Deutsche question Mehrotra your Amit the line of questions. next proceed with The with

Amit Mehrotra

made cost revenue side wanted is, have to and I obviously, morning. huge as volumes the Thanks. the the some by ask a of potential, firstly better, progress profit get masked you on about just environment. bit Good being little revenue the

can of structural the have So business in just probably, incremental which in about help line, the of next the back that those cost possible, to moves as do to once all whether when positive? from think of drop -- revenue to as would revenue soon those growth, year, to increase or bottom hopefully, us growth we variable revenue kind negative get and that how context, just

Rob Knight

Amit, Rob. this is

nothing at as see I We there be direct think costs with volume you obviously level. some come a love than to positive possible variable are that, would spot productive but as more very would volume that on. and Board are on

for so you the to efficient. the back and the achieve incremental think incremental XXXX, well-positioned Plan we to Unified there add I the I that extremely be your should But through return as the now mean, costs the margins, on been and impressive, have point, incremental able from is hit we won’t efficiencies to the that on the is right-size and are volume comes no, Board have that to we nail volume head, does margins because be

Amit Mehrotra

Okay.

Jim Vena

been doing where opportunity future, we about has our that the be just friend. volume into team is operating off train that when train size the size on and talk really work going That’s to growth pays

Amit Mehrotra

operating on that’s has question The And really question a length into impressive. progress the next follow-up good Right. been train segue or my stats.

extending have and you little bit enough you can done maybe XX,XXX? grow a or question Is all you progress a -- because I more now Lance if this can think capital year. been that What upper now. to grow made you limit what’s reallocated obviously the there where increase quickly I I how don’t just can it’s the but feet that mean, get continue you that I to impressive? quickly some talk to know made of has earlier that, bunch like -- can about X,XXX know for continue it’s Jim, sidings there, towards or How investments a you

Lance Fritz

a Well, the done thanks has Amit. the feedback, Listen, team for great job.

lot a in from X,XXX foot places. a foot change X,XXX You don’t railroad an without nine months to touching of railroad

We great have network. a

costs go to business not going are the nice it the more So as that’s going X comes, to it’s of come, up which because X. what’s to drive bottomline we about to

to what In be next up very see goes year. interested business fact, I’d happens when the

and on that we is running Second to the we -- on sure same have more increase with be invest need fluid will train trains and less Sunset some size as and network we invest will invest this found it. in to have done we make the places product and we more

It’s limit, I have. traffic traffic don’t depending what you of on upper The kind a guess. mix

We traffic others big to to them. just have because possibility that trains is some very increase able to the and destination we origin of with build have and tough be

I of had see So know I at. continue that worked one capability have I the what other to improvement. railroads doing,

they we and even it. I next an year buy build have So this think that without infrastructure number we harden that as better issue had will

Rob Knight

Plan on here, more benefit the is There that we It’s is is manifest our of XXXX traffic last volume of a in lot and one thing to that it’s much now. mixed have running design Unified lost and people. got note a of train

to we to XX% XX% talks us can business unique or was probably the days, Kenny network of it perspective and into in that and in three-quarters, our on a win about the we grow two-thirds manifest different size, which old was wasn’t from little the used a that’s segments across world, that of whereas that opportunity more that historically it more enabling is boutique means do train. volume leverage limited. Well, it if to conducive pass train looking to can number like because

benefit of a big XXXX. that’s Plan Unified So the

Amit Mehrotra

helpful. That’s Yeah.

calls congrats. Rob, Thanks questions and me. too hope miss you much. for our it That’s these I Okay. don’t much. so

Rob Knight

Actually, it. I miss will

Operator

line with Jordan Sachs. with the Our question proceed next Alliger your Goldman Please question. of from is

Jordan Alliger

given up question quickly Hi. can gear the reduction smoothly? front, I that how back. much you know for you shape Yeah. will the so can year, to run quickly Question, you, network in next good snapped perspective had volumes operations headcount you A the ensure gear incremental from that though, you is morning. Good have up need for margin or would the on

Lance Fritz

to highest the yes. say, I level at am Yeah. going

conductor, train to cut has make to crew, the a the been dramatically. more bring our and out have a But our upside number on the agile time a changed and We of things be on ability that upside, both hire and downside.

looking conductors there to time to Jim, other we we that muscle. actually forward new to exercise the are things We What next are have add been thoughts? have your some doing. are

Jim Vena

the it Lance, The bottomline is you increase. is, I right hit think on we to don’t think, I have nail.

business. in increase an have We

we increase not same are become become helps percentage more on go a It to up going as efficient. to or more us efficient. going We even

because could X,XXX that I this we of When in when we shows the of cut in this right we have business the drop got shown the the a efficiencies adjustment capability have lot to do make system. is think to built have us that what the adjustments FTEs third of and we for kind an into quarter. you and that volume quarter the level was

So I what the into to the year next I excited looking it. am very next few about happens forward and months am and

will the dictate think great numbers result I a moving this forward. company for

Jordan Alliger

then is follow-up folks And that from quick on a just out hearing Thanks. various better we there intermodal, rails. service on much the keep

intermodally. well as guys You

price it to what shipper wise, let’s haul, of discounts truly rail, what length spread now, a Thanks. is say, mean, you if I offer to customers, input to trucks move especially a to volume the back your any versus percentage service versus -- sort positive needle to given to to sort going the what have spread if move induces and narrowed what of pick and you that’s between talk you a get when the So volumes, on that? so, trucks the of have

Jim Vena

Yeah.

they rates from our really The where turned over being mean, a spot terms event. talking of and has has lowered. that XX% than will less that months highs customers service and corner are are have from in now You about take the a last we XX% are improved now are I realizing right it year our service where on the weather few They while. depressed. were a

that in In said rates to forward. would where we going XX% XX% terms the from marketplace always anywhere be continue will contracted the to we happens rates need what we the to be than so like see contracting to delta, that we and from of in have lower

Lance Fritz

more that of start spot up. truck by will put back to Lance. adjusted This our business one and who service truck second on overcapacity capacity, Jordan. a reliable, convincing to historically start their book supply rates And really rail on over product rates the note but rail. Hey, split is, Two more get is the going contract to of to time putting period would for benefited of thing customers have those then points, needs consistent, have

status I opposed quo over time, even more less we opportunity think, So as in the see theoretically, environment. to should

Jim Vena

wins I that out is think the The team putting are is already expectation important wins. we some to forward thing commercial XXXX seeing move are that next UP will is specific and we so that continue already in there as the the that year. together

Jordan Alliger

Great. you. Thank

Operator

of is Please your next The line with question proceed with from Bank Ken Lynch. America Merrill Hoexter the of questions.

Ken Hoexter

and analysts with through And and your on all talk congrats Great. way really to new you obviously, role Jen morning. to finding enjoyed a again. to years, Rob, of Good working the

should like on easier the I Energy quarter the little worse off put a are down a that great move look than that we maybe turn look on you as around snow, if term quarter here, big started XX%, which particularly maybe, Premium, XX%, far there a forward? highlighting that we call and quarter. to run like nearer than down can looks comps now flood, at Just third would the you so bit quarter on you are Kenny, third down drill have the worse quarter, rate so fourth anything even but XX% picture, anything Is the with just

Lance Fritz

Yeah.

clearly If comps. have tough we some you look at it,

intermodal, we think the different with a aheads gas international that around year. in it our than natural place especially of and clearly, some pull the were time all on side is faced I remember same intermodal was last we the

are that So two issues structurally there. are those fundamental

to continue automotive eye in what’s keep also on the will We an on going industry.

the are see GM, although, all is be to see with in team on it’s significant to third players the fourth and early with Detroit the quarter. impact that impacts going working in quarter, we Our a and having the auto didn’t we working them

Ken Hoexter

Okay. But tougher just to, ahead would it I make guess, understand even that, comps. pull the

gets an So earlier rolls easier are as on? quarter it the was quarter you saying event maybe that so

Lance Fritz

am those are I is down. what you in that are that the seeing What saying delta comps we terms No. of are impacting

Ken Hoexter

Okay.

For this quarter. Yeah.

Jim Vena

start… Since

Lance Fritz

Since start…

Jim Vena

quarter. of Since start the

Ken Hoexter

any great that to XXXX? if from you out are yards or slide of Are humps, the as your of maybe Jim, then, kind more it And moves point thoughts the is improvements newer there right. All step continued on see Yeah. forward have function you on trying cleaned move see just as kind rationalization. there additional on you incremental this into

Jim Vena

look I for fast everybody. we the what a we better efficient that’s we give compete service to we winning holistically think, game, I not are do so what are we we points and is drop are product and the just the are if numbers remove able our against possible, America, touch And company, move you have as to what doing. as then this operating, most become in is railroad North doing. a to because we at question, it’s it cars look at looking trying great All of at trying do, are whole

what So is started. there I just see we out

we still to will lot a of them at as a little are and I innings to are not it, early tough, baseball Yankee a are truly are in move you the company, will We the season, have we now, time end and tuned, of productivity-wise go. but announce think, that fan do year, this we I maybe if ahead right great stay and we and ready

Ken Hoexter

Great. right. All

early. I it’s say Yankees would think the still

So a lot, guys. thanks

Jim Vena

I was for Appreciate it. was I for that. comeback. waiting waiting that

Ken Hoexter

you. Appreciate guys. the Thank time,

Operator

Credit of Please next from Allison Our questions. with your is Suisse. question Landry the proceed with line

Allison Landry

have metrics asking maybe here should a bigger accelerated your Maybe, like in or given key think recently? there be give number the morning. to Thanks. recent and improvement on the million you maybe that Could least the without at up year? about XXXX And in to And a directionally that because this than initial specific comments on to this us you just look productivity. your thoughts reason what on plus really Jim, could put congrats Good it, Jennifer. $XXX Rob it following

Jim Vena

a I put on am number year. next not going to

history and we seen from what want where place with next improve efficiency. I we have this end what what put we -- that where up to in our operationally company and see to I my year. the continue wait is for and mark Let’s and But will see we

the draw business job on We We try to because marketplace forward. better we more product. end-to-end. it moving with will win be easier to to able in at a look make going I Kenny’s am

as I about ahead any us that’s win-win get close you think and as moving will a numbers. So it’s to giving for I

Allison Landry

have go the Okay. Fair opportunities for And you rationalization as enough. you process, seen sales? through any network line meaningful

Jim Vena

tuned. Stay

look and we mix what just it will as business through the work We at.

have got this plan announce. pretty at network. to good at of But look nothing we think already point I a our we what

Allison Landry

you. Okay. Thank

Jim Vena

You Thank you. welcome. are

Operator

Bernstein. the David line The proceed with your next question of coming is questions. with Vernon from Please

David Vernon

taking Thanks morning. question Energy challenges franchise, now. Kenny, time. long-term the you sand you and to Good Hey. for coal I the wanted about right obviously, ask a got have

closer positive of I’d what near-term into driving petroleum positive as kind in out the that signup negative and of being to think and kind could products. plus a of up XXXX is do are Bakken? like flows the shift to complex get understand built got what you pipeline that have gets risk you the we You

Kenny Rocker

Yeah.

again, will the sand term, for the improve. longer So think comps we

what there. will see We happens

oil so got we out to we along. as the there, opportunity read crude we resources about gearing the have of a years that that type to and are increased up, and look we have market think and at optimistic volume the -- has come the On side, curtailment, a I are feel I few couple you more we where and expecting government very

David Vernon

origin some coming of the stuff, is that also out or Is that predominantly stuff Canadian Bakken?

Kenny Rocker

into at Canadian are we the is That that Gulf. the looking origin

David Vernon

Okay.

driving near-term? growth what’s really that’s the So

Kenny Rocker

Correct.

David Vernon

is maybe softer. just bit segment what dynamic that a of the in the going quick in little average segment, RPU next mix on inside then, [ph] a Products Okay. the follow-up about quarters? as came a talk of And is what sort and the outlook Industrial Can sort couple of little you over bit the there

Kenny Rocker

Yeah.

earlier, bit Rob growth talked strong and we the products. got So construction have double-digit on really some little this a about

Our have of a haul. shorter there. length rock That’s shipments

possibly Petrochem look lot moves as it’s you at business, the a -- make could that Gulf. lot the into and the also of a interchange You inside

of you there say So other mix longer business strong that our got the down. as like that’s a growth not pieces of is lumber some of as have haul

David Vernon

of that And shift shifts the trends of sort mix of of or it’s -- future will major ahead this sort foreseeable continue for any sort or you see will just kind do those continuing?

Kenny Rocker

the Petrochem and grow. expect to would We both Construction continue to business the Product

the susceptible. I also out us market that’s the flat, now, right been again, it’s help think and with housing truck pretty economy will

market a better help housing help the us there. little a and we would overall that economy So for bit in stronger more will compete side with hope

David Vernon

right. guys. Thanks, All

Operator

Thank you. of is the your Barclays. Please questions. from with The line proceed next Oglenski question with Brandon

Brandon Oglenski

I decade, business, over have returns everyone, think, at fallen morning, guys you obviously you as Good and growth, Hey. margins if be longer the Rob, Pacific term When last congrats Union well. I a comp in, am there just industry for look you guys getting and may question and improved thanks this period. Intermodal we the going one, to ask my that relative time behind to has but probably but in question.

new I the was Intermodal from or that for the or a competitive with about attractive have guys mean, might been operating a well more forward mean, know now looking couple in border guess business of out than calling plan, past here looking is of you years you that very I pressures. maybe more north is So do I competition the Jim it how forward? it think

Lance Fritz

Yeah.

domestic. about both So let’s talk broken Intermodal into business international They are attractive. and two pieces, the

presuming us has right attractive cost Our both in price. work on in to growth the structure it’s made

grow up And that last Intermodal the we marketplace it of domestic that has return. truck about overcapacity attractive the perspective, a else. with intermodal record happens that anything than until behavior have out got I more makes a to domestic lot think an capacity the track growing in breaks from trucks, to in do on of Once months it almost just flip there’s XX a difficult call and

in current to customers piece us Our of playing and think, attractive the boy, has terms playing so and they viable product look at changed a current us that of cost for field structure are the business has my what’s an network. alternative our truck field changed service

positives on those growing back also needs for of occur getting think capacity be context of both Intermodal. That should I right-sized. truck get to the in So us still of to the domestic path

with Internationally, doubt and Coast ports think to has troubling. a fees both our Southern product and lost degree to more know it have to and has cost California East box the paying overall less share landing California I I like and less there to And do smaller ports ports. that is a that at that to is service ports some infrastructure do, say, Chicago to, the places no of with do and from let’s market Canada

back States So business -- to Coast California winning the we that whole port has to along understand in to understand chain are it’s that a West environment ports United trying really the competitive the those help the ports. dynamics of West involved the of in Coast be and supply and very

our designed game. end-to-end Net-net, is product on service an being

as stripping it’s So not reloading, looks quickly we can about, road moving in in like, like facilities the transit opportunity well are. with what around worried right in grounding that need going our all how is our future. we to we equipment I what looks and We all direction, and that just that to think, Chicago, in the our is the create turn with the are partnership over ports and dray do

Brandon Oglenski

side only going these you address some Lance, in challenges? to of I I was guys on guess, efforts said, that regard, ask have well, I to but one, I changed And the marketing mean, your Intermodal

Lance Fritz

having are conversations. we sure For those

seen out lanes. and We de-market density have got our change. design of You it low product

the focused ramps changed Intermodal We that have dedicated. and so are layout more in Chicago our they much of

instance, GX GX on on the automotive yard that’s helping. in international, in and For on Proviso G-- North-South Joliet domestic, center parts on

team up different way overcapacity yeah, right get a And product good have service we So, a addressing those to product the into back the a Kenny’s the make it’s in to looking now right matches to truck to right it’s service happen basically would marketplace are say, the that wins. box. I and marketplace, and And essentially now.

Kenny Rocker

Yeah.

visibility terminal containers things on going move date. what customers our which the which they boxes or on reservation We on that Intermodal so like good turned have really to reservation have are

or So love. it takes there, out customers ambiguity any confusion the which

Brandon Oglenski

you. Thank

Operator

line Spracklin with RBC the proceed of your from questions. comes Markets. question Next Capital with Walter Please

Walter Spracklin

and these and When is want roles and of morning, the Yeah. you rather Rob, so difference I PSR, decline at reduction as suggest expect par intermodal come Thanks your and a closest I I to on. the that the Good some and implementing can new declines the that a service here. on to weapon that your completed your a peer and between company congrats, see disruption, is any doing would tool. I BN. very everyone, cost that it Union workforce ripping for that way would on. relative the that level new you than Pacific, of is retirement. Best there out and would course PSR be Is on are of much. yeah, locomotives you the the use argue would back I it luck. that Jennifer, going disruption temporary to Jim and answer mean, when

about that doesn’t environment. a negative, much just real share weapon I can it and You for -- a that’s than use gain rather as tuned mean, a competitive stay more your commentary or a leave pointing any more disruption encouraging on a you are than I that? service, competitor, is competitive if think, due less I a guess, at just if on comments it temporary little was to more

Lance Fritz

back. lanes, points. little Yeah. we be might that a specific me while a impact that rationalizing finer to couple a gave X so Specific the answer on Walter, point little of put Intermodal, let percentage our to

are that. bit I that right, us would expect of to you through there’s So a back grow and

piece that get particular those to truck always a still will. think back ebb moving Those is over and and time business I both are two marketplace is in parts. the cycles and there flow But box that the that big has it in in overcapacity

Walter Spracklin

be we early very just always then following fast, adoption, PSR have past And pace, of very to Okay. the up significant Jim, in noted it on the on.

third little quarter. economy implementation obviously to early we better a and is in second another a that pace lot of to a why muted environment. of bit a This growth expecting improved but flattish, quarter impacts were bit PSR QX Is nice second compared the to there for the generally had relative a in given the answer bit or want has effectively for are seeing you, done reason? more been was in strong reason quarter you more execution the obviously, of a we prior quarter, it flood I don’t hoping a

Jim Vena

you, of Walter. a Son telling gun, I am

XX%, So dwell if average, up, next volume average a That’s at up X,XXX time okay? versus X%, velocity look FTEs, son the it. drop that’s productivity again quarter, business freight length XX% train I dropped, gun, workforce better, on want dropping I of model a so way

to I I day up. We could don’t smart blow I going think up about showed that. a thousand do locomotives it. to be not I am we have have the got park the place. first to want

and game discussion, product and where it’s we a long mean right great to years, long it’s by this the intermodal want Get a it’s think question, right. it I this long don’t do I is a be. game, and whole but

be a efficient very We want railroad. to have where we

open up We markets. are new able to

able and in without truck price. beat our more is the are to competition railroads which bring We product dropping other and

about kids must and their home playing. So that’s coming it, are a tough, a marker. the game Walter, are tough cards, are with you your excited I am you we score hate

Walter Spracklin

Appreciate the color. Thanks.

Lance Fritz

welcome. are You

Operator

with Jason question. proceed Please of Company. line & is Seidl Cowen the question from with next Our your

Jason Seidl

to Thank you, your one, retirement. my offer, Operator. congratulations have on Rob, I

I as years. the pleasure have over for a think been as I long seeing Also, you with somebody of sitting work I jealous in chair definitely it’s retire. am my to

one would bit puts and out relatively punishment. You have a talk what flat quick am success PSR. back. at. responses. a little you that been time knew a But be and lot for call there declining extremely with are work have can Jennifer, a if welcome going going glutton here I some us in gracious that must takes, expect Can generous then again you in speeds here, been more we your I bit with a I Jim, and one Two questions about train your forward were that clearly with there’s surprised All I say little and always you are to analysts the should environment. one, follow-up. thing I but of

Jim Vena

Okay.

People just customer about at let’s look that want measure car train is talk speed. It’s subsection. about I end-to-end the at. which velocity worry not train looks a to speed. So the

have stop our trains for have work end-to-end, So and We cars run X,XXX them. done not of and we running get of added or what trains. been through some to events we them X,XXX at is taken to have get used and we instead extra that able

network have So at looking that. is, are through moving in we velocity that the this anybody point, I forward railroad What we will to. we fastest of ourselves train the see compare

are we expect towards So working more. I and that noise some some

velocity have velocity a I speed. train cars and increasing the the to quicker over of number of speed tenth car the train drop the I being and If X,XXX, take car choice X% by running able I by will drop of and need car the a

that’s where it. mind So is my with

Jason Seidl

And for going enough. Rob, question, for Fair go my Okay. time’s you sake. am I last old to

rent dropping. about You bit talked a expense

quarter. mentioned reasons You of the over is volume one it was off the XX% in

XQ expense in that you same to similar was Given expect a in are about XQ? as be to going in on it fashion down be would volumes the down XQ, rent

Rob Knight

wouldn’t point I look can’t on it see reason any Yeah. why it, third Without to fine a quarter. directionally the similar

Jason Seidl

time the always. I Okay. appreciate as

Lance Fritz

All right. Thanks, Jason.

Operator

Markets. Our line questions. proceed Capital question Fadi with BMO Chamoun from the is your next with Please of

Fadi Chamoun

and doing. ratio Unified more Does I of of we Jennifer, volume are out on the will Plan that the actual dynamic the here. mean, of influenced in on also redesigning we for One payback the things a assets and we progress some volume Good come me But downturn have a see have rationalizing than this seeing. announcements. would Rob by less XXXX hopefully, is and question Jim, Yes. of otherwise? squeezing get help in morning we pace as if the stronger thanks classification operating the topline Congratulations, and I you done, plan are operating kind for all think you and terms can

Jim Vena

trains see No. us more -- would in the the are on. come in helps love I the efficiently that it’s are come and on on Fadi, we in other way really Volume same fact, it. on. place to cars as I we have way that increase operating able to run the volume more

It helps So top I it see both bottomline. better. volume as a topline on But even that wise of helper. us us and efficiency helps

we exactly that’s what Fadi. So want,

Fadi Chamoun

another one Okay. see XX% the volume follow-up. that, next for we there maybe from or would do roadblock is any constraint prevent out you down year mid-single another quick Thanks digits, environment And challenging plus of any Jim. If that taking headcount?

Jim Vena

but no. the hate answer be I to negative is

will on us available the economy. competition the We the for and react gives what what market What is gives us.

and right a that So or and everything see next have we I am with floods it’s everything way and good up year we we we up that year. the see down will react starting hoping in the is

are, we Fadi. that’s So where

Lance Fritz

every That I be fitting would the probably Rob presuming we call. forward to and we together dealt welcome. and are the won’t. is that economy looking time little this, as Rob economy says is. a is with and economy use that don’t we the would bit it’s see volume deal whatever says economy of the a to are to the ending what healthy. But love We that stays the we that get We growth. hand an excuse is,

Fadi Chamoun

you, Okay. Great. Thank guys.

Lance Fritz

Thanks, Fadi.

Operator

to comments. will you. the call concludes over closing the Thank question-and-answer This Lance turn back for session. I Fritz now

Lance Fritz

of confidence to you gives stronger to you. have all XXXX volume it quarter environment, discuss thank really with return to talking us year that very your I that, prefer we results. efficiently structure. reliable with in for growth and lot product leverage operating going fourth consistent And and Rob, cost you questions. I’d and to the With network, our service good are although, again results. look forward Thank In returns a full you, in progress our delivering as Thank made even much quarter January we performance a the smaller a fundamentally a closing, third more

Operator

conclude thank teleconference. today’s you gentlemen, for and does This your Ladies participation.

have lines day. a You may wonderful and disconnect your now

Union Pacific (UNP) 17 Oct 192019 Q3 Earnings call transcript