Union Pacific (UNP) 20 Apr 232023 Q1 Earnings call transcript

Greetings, and welcome to the Union Pacific First Quarter 2023 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, and the slides for today's presentation are available on Union Pacific's website.

It is now my pleasure to introduce your host, Mr. Lance Fritz, Chairman, President and CEO for Union Pacific. Thank you, Mr. Fritz.

begin. may You

Marketing service our tornadoes, levels resiliency, of and heavy Arctic Chief Pacific's the battling people Rob, today on everyone, team the foundation welcome the and positive and which those maintained for President for are exited and Omaha Pacific Vice quarter Persevering is one for Gehringer, our Thank customers, of great past a and Officer. President quarter temperatures, good The earnings snow, again quarter Union Operations; employees of the Vice Executive through first Kenny flooding Hamann, that that me Sales; conference things our ahead. the to demonstrates trajectory. harsh Eric delivered are Executive our conditions, lie you, Jennifer Rocker, morning, and Financial call. Union in of With story

to Turning quarter morning, Pacific $X.X results of share. first is $X.XX quarter per XXXX per quarter $X.XX XXXX This reporting of or share. This the billion first or billion first to compares income Union net results. $X.X

ratio XX.X% quarter operating lower versus costs, inflation of by first deteriorated and volumes. points XXX XXXX Our driven basis excess

ability quarter within as of resiliency, freight resources per and throughout rebounding series time events were car each events, service on demand, greater those miles about greater to our quickly our with is XXX support day. to crew the a cost our products added customers. capture April positioned velocity showed the weather with as we And better month-to-date, impact real our coal A business well to especially had as network. Through

for are operating positioned consistent reliable and service. a We that network is

for reduce difficult than the year XXXX. expected, more it our doesn't a to start While expectations

from goals the all As of front still are us. you'll our in of hear team,

for on Kenny update Let business to an the environment. it over me turn

challenges decline in and offset quarter volumes and volume. surcharges X% X% you, gains, by quarter in by impacted solid service-related the partially pricing shipments. Freight first revenue the as were increased muted morning. for higher a Thank Lance, and good driven fuel Bulk weather

Additionally, first weaker also for lower drove for the conditions premium market volume quarter.

our wins partially However, that new focus offset decline. and by of development business strong some business on

Let's look surcharges to with supply of bulk. these a year, and the X% driven quarter gains. demand as by with X% for pricing Revenue groups. closer up business down Starting take driven shipments was was solid at reflecting year-over-year. last in revenue grain car volume grain average grain increase weaker each fuel Volume and higher a products compared by for served core world per X% was region. UP's affecting down drought export impacts softened, coupled U.S. Grain has X%, in

was were Fertilizer export phosphate our potash conditions and lastly, last in imports X% volumes volume and that reduced renewable in resources. challenges shipments. flat beer carloads was negatively impacted Food down service interruptions impacting weather associated crew to fresh and both compared driven coal from by delaying can year down quarter. and decline locomotive shipments. offset X% and refrigerated conditions to by weather due weather and volume Strong was the a And

by was quarter demand. for driven and surcharges Moving lower higher on pricing improvement quarter revenue production shipments to up volume Volume by industrial to core plastics average chemical X% was due gains. X% housing down to fuel year-over-year car industrial. chemicals industrial X% for and in Industrial reduced challenged due flat. per revenue the the Industrial and a was driven

development last driven wins. construction along to continued deliver Metals year up with growth. year-over-year increased in compared and new growth was materials minerals and by shipments, X% primarily frac volumes to Volume sand business

lower driven by for starts housing volume corrugated soft demand and products shipments. Forest box nondurable year-over-year XX% declined goods

were for were specialized and LPG service-related offset partially strength fewer demand driven by and year to shipments weather These in challenges. versus gains due last shipments by ash soda products. X% up energy and However, petroleum

volume decrease surcharge driven Revenue X% revenue for pricing last quarter gains. on Automotive inventory and were vehicles. compared core X% revenue for increased strengthening fuel Premium. to volumes up and a was the Turning year. by OEM to positively X%, higher finished car production Average by replenishment in reflecting per dealer

Domestic by intermodal truck business offset market, driven parcel weak wins pressures. inflationary inventory, were freight high capacity a increased and by and

weakened On shipped resulted the quarter container year-over-year year, the international more last side, of first imports, inland versus growth. despite in

X. now on moving So to Slide

the supply for and crop bulk we it see outlook Starting our export this we is year. demand term as expect as today. commodities, with XXXX challenged tightens to near rest throughout our Here grain softens of be

we towards as by in look the encouraged we're fall, late ahead forecast. season However, the crop next initial

winter natural inventory. low a milder more coal, to allow gas prices build and utilities For

experiencing shoulder We through the are months. softness normal

Looking further weather. out be year, the on will summer gas demand largely and in natural dependent prices

business associated development Lastly, their coming wins. and demand, we to shipments expect market biofuel to renewable feedstocks new production diesel of grow and solid online due

is for shrink is forest the XXXX, production to on forecast in to The demand in weaker industrial. Moving and products. getting industrial

wins. new expect to we metal construction in strength However, see business and continued with

near-term finally, levels, weak as people spending and market spend in we than towards consumer services back more shift expect intermodal pressures for challenges the inflationary And Premium, goods. to inventory from high

market potential We watching be the will in closely of for the uptick year. part a latter

strong automotive replenishment. OEM to production continue, expect by we addition, and In dealer inventory growth driven

environment we but other some are tough a a areas. commodity up, to in strength facing our expect economic we wrap price in uncertainty of and few see to markets, So

in have am maintain more allows us with we production business to resources this focus relentless drive to volumes that where the capture confident guidance. working are to pricing Our closely Eric diverse team's portfolio available them. agile on team year. To will industrial we exceed and I his locations demand, our development need be and

Eric operational With that, over to I'll turn to it performance. our review

on you, X. Slide Thank and Starting Kenny, morning. good

to strides evidenced in the continue XX% make safety, as performance We for first our great derailment improvement by on quarter.

and We've XX/X geometry operating center. made and fleet. inspection wayside on progress by and Precision technology, on is more our injuries. our This progress our of network implementing with zero top Train practices While on zero safety, encouraging command than X,XXX remains state-of-the-art future detection a goal derailments of our Builder devices incidents like

Further supporting our a and proactively critical the detectors actions. announced standards share wayside These key how safety the use industry enhanced and additional in efforts, we data. installation set of for include March, of

addition, improve one the into in program, billion Pacific expanding efforts transportation almost in And is annually In monitoring. industry provide capital nation. and invests our first the the training railroad to renewal condition Union remains safety. $X its further to through responder modes safest railcar real-time network technology industry back deploying The of

look current XX Slide to our a at moving Now for performance. operational

this Nature the season, this Sierras, across weather bringing example, portions season. of crews These Midwest That's flash Union Pacific over forms. Arctic made blizzards, in XXX snow. of UP a mudslides As Central for prolonged above through battled challenged portions in in operating Lance specific XXX% persistent the presence and felt mentioned, events state The temperatures. maintain upper system network Employees system. of heavy inches flooding, on snow extreme also fluid historical ice to our worked averages. Mother many our central our across recorded her corridor California and ability

and after our each dedication the recovered to employees, quickly network thanks event. of the efforts proactive However,

exiting entering we're versus state as XX the And time demonstrates, were a last Slide congested this on quarter positive the we the chart on year. trajectory

an TPC targeting Our car That in TPC freight also per the manifest of training, X,XXX miles show efforts velocity approximately our in reflects crew and We employees day, the focus currently increase at we healthier metrics XXs intermodal backfilling around XXX rise on is network challenges which April with hiring month-to-date and as as a attrition high result a on versus locations persist. state year. in XXX last where have well.

addition, needed. utilized locations and hard-to-hire borrowed In address we to out have crews get where employees

key for resource plan the last on through car Intermodal driven quarter's manifest quarter, auto by we Now let's obstacles held compliance interruptions. plan made and Slide effectively XX. improvements ground the the flat starting Sequentially, battled we quarter. slight and compliance review results. velocity trip weather imbalances Both our metrics trip our of remained as from freight performance

will XXX product, our miles current car performance. consistently including strengthen traffic our intermodal manifest service around entire bulk, freight With running XXX per and mix, to day velocity

productivity XX to quarter Slide efficiency dropped network versus Turning review metrics. Locomotive X% XXXX. to first our

from status. a we freight In the support the recovery on in locomotive moving second remained To larger the network. are fleet the the is ready quarter, rightsizing the an at more in XXX to it that as to last the operate sequentially results storing we quarter's over to and flat units of fleet. process focused continue effort However, team of point,

daily productivity workforce lower and to increased declined driven an volumes. by quarter XXX miles per number X% trainees of First FTE

growth training and Our while supports strong demand available ability out managing to capture employees. our future and reducing borrowed pipeline

results. quarter's train cold initiatives the the length productivity presented team of committed covering expect employees with As our the to effectively Train to coupled training, headwind we tier length intermodal while graduate flat temperatures The is compared last our to remains loss quarter. to from we're strengthening a extreme traffic, network across Northern productivity. network for improve. Lower

on of And we up Wrapping employees' unchanged. the addressing gained team and paid Slide pleased sick to remain life exited success agreements is drivers are the committed for feedback momentum entire regarding remain the The XXXX to the dedicated on quarter. XX. quality building as with recent We leave.

work consistent solutions strong finding with and more provide continue a will our win-win to product service We enable that diligently schedules. employees in work

continue to aggressively from for heard to you as volumes. addition, we look In strengthen Kenny, opportunities

reliable we resiliency, have added foundation of cars train safer, targeted confident the to I to the will growth provide sets that demonstrating product freight consistent a needs and am capture back service to the the laying demand. available With meet our and network customers. more product service we're

over will I review performance. our that, financial With Jennifer to turn it to

good totaled million increased accessorials. first levels. decline. Slide supply the share. a a morning. chain increased per year. in and million to $XXX expense X% versus the other quarter XXXX increased more was $XXX reflecting expense decline. by by Lower quarter revenue real $X.X decreased million our despite earnings driven million income year-over-year, largely resulting in on Interest X% than line, year-over-year intermodal operating offset statement. increased volume with of XX contributed subsidiary billion, income accessorial $X.XX first at revenue, debt Below to X%, Operating income down up $XX $X.X $XX greater X% driven transaction billion, billion, drove by fluidity a that a which Thanks, and last Operating estate higher revenue Eric, start volume X%, of onetime Other versus look reduction $X.X X% We'll

repurchases, $X.X was share XXXX. increase income flat share per But to X% billion combined when versus of with resulted in $X.XX. a Net earnings in

the increased X.X basis points. XXX points operating Core positively on lag and is the lost that XXX of following is additional a Our impacted in But to impact fuel were point ratio. the drag surcharge prices expense, between fuel offset ratio to XX.X%, to operating quantify. results revenue $XX our both quarter million. excess by to benefit and weather, be programs first basis in during quarter operating ratio and fuel estimate our which Included difficult of the we

more the X% to freight mix. versus Slide up short-haul of revenue. our of looking in XX programs. our and points. negative Fewer mix offset combination freight pricing primary which the million totaled more first basis last actions revenue year. business reflecting fuel as and The mix. increased the volume freight breakdown revenue, $XXX lag revenue, points closely added reduced billion, shipments basis surcharge XXX XXX shipments Now were of revenue drivers of at year-over-year Total our provides revenue mostly ongoing points were lumber $X.X quarter XX a Lower rock price by basis

to summary versus of XXXX. $X.X benefits a our Slide first and quarter XX totaled increased expense expenses, operating and Compensation which X% now Turning billion.

the training increased workforce in quarter efforts dedicated hiring result X% levels as XX inflation XX pipeline. quarter partially was up Cost a last by X% of increased to the over transportation employee X%, only months. larger with offset First employees wage per the our

our represent quarter, the labor agreements under to April employees. During of with These of we X leave the paid our unions professionals. craft half signed just agreements majority and our provide sick effective to first became

digits employee to we we able are per discussed up the mid-single expect agreements for what in reach with be we to the would year, consistent board, across Assuming cost January.

X% grew as freight. prices expense Fuel a X% we moved increase on fuel in less

fuel driven increased materials expense fleet related rents was a of related our larger maintenance reduced cycle and times, fuel more expense active Our of X% offset remediation line than services higher hire increased XX% locomotive as up X% fluidity. efforts Purchased by deteriorated consumption impact other and was primarily rate X% the of grew inflation. elevated by and X% to expense as a network the other conservation costs. car Equipment result to environmental and

in cash in our was and XX settlements pay The flows. primary to payment back Slide Cash you $X.X both cash flow payment. Emergency line That January last which Presidential and cash paid exclude to from from quarterly XXXX. first billion Turning free the when decreased our Board driver flow, operations with performance billion totaled conversion also $XXX million. impacted quarter year's in rate $X.X with in that roughly

we quarter as A-rated quarter, returned shareholders we with of an ratio three billion we share continue by our repurchases. debt-to-EBITDA the first to finished dividends the agencies. In X.Xx and to be through $X.X And credit adjusted

Wrapping to production, excess operating price up achieve full Slide inflation XX, gains XXXX we on of maintaining guidance our in volumes industrial are ratio above and year improvement.

capital unchanged. for allocation also are plans Our

out. are takes every with puts year, there As year the how plays and to

April than XX. a XXXX slower bit to is started expected, everyone, remind need only I While it

volume, productivity. of months in with service We have us and opportunities and many X.X front

I'd Before express my like I back Lance, the team. to to thanks turn to it UP

We running this But everyone. focused railroad. we and factory that the seemed are network the keeping Fantastic and the customers forged our given work skills by Mother testing faced, the outdoor those very fluid team in ahead, our served. is extremes Nature year skilled on yet

it turn back I'll that, Lance. With to

you, thank Jennifer. And

continue serve. Derailments safety. great communities critical Eric industry been support in have we the on As entire strides we we The the in spotlight to of discussed, role make understands play recently. the

since improve record. fact, for past down Pacific's are XX%, In the decade safety the Union the can mainline industry collaboratively rail Working further proactively, derailments that helping industry. almost this and on make XXXX, safest

consumer-facing rough right in shape Kenny, markets you are forward, Looking now. heard from as

Importantly, to to additional product. a The demand entire of plan though, team carloads number markets. is additional remain there capture a by supported those opportunities executing improved in capture service an

achieve second approaching, actions like the goal At highlighting Day gas Earth is our XXXX. I'd highlight Plan, Action to targets. updates the annual emission emissions we zero Pacific released of XXXX, with Climate greenhouse planet. Union net This our of to to end protect taking our by reduction Finally, includes our

and Over year, battery the modernization work. program. over locomotive, And committed both increased biodiesel we're and we've recognized for our we've our being turbocharged that to locomotive past electric to We've blend X%. hybrid

was Index we on Dow stakeholders. being of as for is Pacific highest companies. This sustainability And Sustainability committed of a first year, past Pacific in long-term value Union Union transportation the member Fortune's category Jones the to leader, ranked a the were our admired the selected all railroad time. most driving for

CEO months, for company to the potential a Pacific. in energized Union future. is until the to turning from it to say helm to I'm CEO at the by fully can relates leader. Before as like executing the Board identified, what as And its process, what the Q&A, is well continue search can the be coming personal into in we the lead the the of I'll it job new as a team has company accomplish engaged next and this great duty to experience wonderful I identify is years

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

Group Wolfe [Operator first today Research. question line the Scott of comes with our Instructions] from And

on basis the positive looking quarter? then any margins year get year year improvement? second you rest improvement. for? think in to on Lance, timing nice and down us Obviously, to to any margins some thoughts? And we Jennifer, And on Board you inflect comp. thoughts points. search? Just full of thoughts the need us easier And improvement are you any an Do Can XXX any the full that what It's bridge help QX? CEO

you, Thank Yes. Scott.

CEO. earlier for clear when that safety, then, process they business right, and circle service, the year Board They and a a just experience of operating new were on were the we identifying record sent track good what on release were press customer the in to clear back looking that a they development, announced I'll in So the in vision culture experience.

in being on clear the So is using crystal and excellent I they is for consultant, party, are very searching And have they're you only external thorough they're which underway. for. we're what search, an their update

that looking I some make at going half. that it last year. us Particularly points -- did sequential is improvement that first little need through certainly, to year get the it the So exactly to drive then to you that, question, now, something you're help than that for needs us fuel then, the year-over-year benefited point guidance. to that in right. We will be able factors year, The the different mean, our to back in your to meet is become this are X.X That saw right Scott, and improvement comparison will OR tougher quarter. a to

is 'XX different it did. certainly, think, But something. fuel, than look So may I

you it's know productivity. what volume, the available And of depends a but is, that it cost we us. to bit then main and It's control. course, have that volume, we pure price levers But that also have little

friend, are ability are have leverage, and costs something able that So in being we're to volumes the not if our careful not and that our through to management. get diligent very we control also

confidence us one ton year cost. where can a how right last in we squeeze operating It's as look and can we now. thing. the out is into is Jennifer, What gives we network of the place get And a excess the volume the

Absolutely.

with the UBS. Our question Tom comes from of next line Wadewitz

I head to ask level. you wanted count the about

the looks you've while. T&E a static seems think I like the the like had but trained pipeline you on for that training it's for larger been level that think that I of it's know system are people

expect that how are. fits from an and problem performance thinking into get system? I that of Just trained And how guess, where TE&Y in about terms that so has been terms think the what I are in stabilized? go to you in of we ongoing would you just to guess, need then has for about And network attrition attrition, where wondering I'm that dynamic do you headcount on

Yes.

volume. total looking the is saying hires we to certainly now TE&Y cloudy little XXXX half. addition the right the in our headcount on quarter would Tom, in year look in a it kind of the first for predicated like what entered back So plan did us, to Volume

that plan being of And at adjusted. is so and hiring course, looked

pipeline going Having quarter, the pipeline to you're in The active us. second pipeline is for the out the very the see the in to the question Net-net, of like pipeline. of add year? us training X,XXX coming really what training over strong the headcount rest TE&Y a for is look

about our five have We last the to tend in necessarily hasn't right over we changed see now. attrition, really years. course of terms a workforce. of it the turnover XX% That In don't TE&Y changing

is of one factors out suggest find little a getting too quickly. can help the adjustment So our if over we us ourselves far, skis attrition

guess, maybe it level So way kind the is look the, but trained goes it. to the headcount static comes overall pipeline as at sounds down I up, like training of best

really the volumes think on degree, Scott. a does I it to depend

head And going count so you our see said, going the to certainly, as quarter, is think total different be second than last year. up. I probably Lance certainly It's

the First does is to pipeline half, we've the going the got training what half half. loaded the be question like. And look first I second in think

of Our line Hoexter next Bank the America. of Ken is with from question

maybe the I just two. mentioned or the were how to I want it like that guess, plan? looked down changing. flat times, this velocity Maybe don't Is about week and there -- rebound, some or kind of but what's talk of throw anything a you quarter, thoughts? -- operating I did, -- of the you So now really levels Lance, just talking Eric the came couple in operations doing end the during this last the showed -- some know past then Or about? Was if was of few operating and you with was stretches solid just recently guess, more weather weeks, service guess, the a changing pretty are I that Eric were

Ken. for question. Yes, Thanks the

winter, that our expect With amongst with that TPC it that done not customers is about having summary we towards ago, being on of to drives largely, is headwind. without day. output end seeing X if we've the is the hiring you what having winter side the other of to are. It's as level where X [weather] should Your was per behind miles that. us, exactly weeks us where customers metrics all accurate. work our we weather come expect were the reinforced to XXX actions, maintain our expect. the tail And And out to weeks We've you're entirely, XXX of really X

with from Next line of question is Wetherbee Citigroup. Chris the

guys year? Maybe you quick count out depending as on recovery, sort do one curious, the have follow-up you of the of the that. second point. of on sort service half degree would about volumes about I plays I'm to how guess think of able just reassess in you with pausing some hiring the head given been that of sort what Curious

that And on then Kenny. maybe point for

the you're the seeing across Just of not in bit Curious transport, Has from Union like of picks kind in near a necessarily terms in there a the softness little of seems bit March maybe the of Just lull there. like you're little there here Pacific be seen April we've up thoughts or board been month term? April, what a customers. softer some be a would helpful. and bit it what spring that of specifically, hearing

Lance. question. I'll over start on Chris, Kenny your is second then turn to and it this

headcount question little So bit. unpack a let's the

year. been time experience our this but last where shape is in everywhere in we year That people are same months. filling been hubs very our importantly, year hiring the versus be it more the the we've X to for last this full, region different workforce able crew be than find, able in to is to railroad found all candidly, to time, or classes much across difficult very Northern looking hire. The X the about for better We pipeline last we've about

been to workforce, finding paying ways creative, half like to that's the And pool back a year, things in up much of from. bonuses, aggressive ramping a right create last unique we've dividends more hire So now. hiring

to hiring to plan half as are and the for doing of the evaluate what year of what we right now, our look balance is So in back the versus we're you're right going starting terms into look volumes exactly like. original year,

expect volume variable Our have volume count longer-term remains grow less guidance is be at fully than and that place, we head our in numbers and to are ultimately growing. our

clearly, a out the crew little a get -- little our and healthy, had to excess fix of last factor year, of not to boards crew the that board could recover events that that problem consistent. service so take there. we We're the some We're our borrow-outs. and in so right solving safety place add coming we're And But we ship now. of with add essentially excess, was quickly product

So have hiring we in to employees them because our a the year. on be is Out, replace to burden to into rest and going much borrowed. looking it's Kenny? are shape they're expensive, the but of better

Yes. start Chris, let's so just off.

we're our to look expecting lull time, this You that coal, the mentioned. I it seasonal shoulder have months a at

natural last prices higher. at look you it much gas year, were If

capacity normal So that's We'll an there. of a eye There's a out truck look domestic quite this bit market very for of is now. right on a more keep intermodal. It's loose it.

that. be So watching we'll

business then And strong was grain if last pretty you still year, at year. also, it, at look our of time the

seeing we're going year. grain more to last Now where exported we places global

year, to vehicles, construction mentioned, the looking that, our it's bullish these rock rest one area biofuels. whether that's markets of all said then having the Now some about that I metal, we're still the and of finished is forward in hey,

Ben of is the from question next line Stifel. from The Nolan

maybe specifically a Maybe, could around from curious Mexico. been lot if I hearing if Kenny, the that, any you're notable of near-shoring, a specific manufacturing around we've up business wins reshoring, moving little of seeing, hearing North there's you just with something can that's or about put to your you're I to customers. back America was if follow that noise whole if color anything

related whether OEMs. comes some other bit out. move the that little that to us. great lot bulk was one we're seen that, pretty a out remember new in to a public ag seeing of rail, or production the expecting There got that. inputs large Also, with our ash metals side, on analysis the commodities, there's auto are production glass, came for of receivers it's We the by We've highly for And that there. soda car. in and That's the you

encouraging, we the time we're can that So point is first looking that yes, toward. tangible this it is things and seeing

that's fabulous leave won't So a We a for I'll it there. at and go that. network positive on. enjoy us. on I

near just the to happen timing longer-term this how impact term? Or an picture, should kind think this And mean Okay. that of a on is dynamic? something big of clarify, I we is a about that? could

big longer a these the physical to for mean, build there. actually picture up to is I This got term. you've locations time get infrastructure

it's And not facilities -- Ben, American North in to have new market. the spot but, production wonderful

share. We our fair will get

any a Mexico. wonderful good the shows It's franchise have us. it's from We to and And for time industry for good American up Continent, in North railroads.

the The Stephens. next Long from Justin is with line of

full the guidance. I been back to wanted anticipated. you of to the circle Obviously, year start the has year than more challenging

in to so, occur? do see that market? a to outlook, if when on the meaningful need freight Kenny, maybe then, your just hit And inflection And we positive clarification intermodal. to order in need So a does

percent you wondering change I up, I both but if think saw international domestic in international and you said could the was were volumes share intermodal. you

Again, the relative guidance is first forecast about was volumes our I'll year, the industrial gotten about to be industrial exceeding down into production. now X.X%. We X.X%. It's bit of actually question. down that came part to worse. production It's a take tad

assets down So weaker, to to of you different started [bump] available that exceed. us in X.X But just a the quarter. And improving, product are little us. to talk first yes, kind points and about service hit move as that, to our carloads, move we're to more flexibility available to play the around into assets fact markets that's the more putting that and greater is those giving markets that's Kenny heard not here huge we are a the us

obviously, that guidance, goal so the we be as will reach we able And year rest our to of quite full it to relates which we volumes and reiterated. confident feel that

that. on break going a facility Yes. Katy expand. of their don't to one, in are announced against end. either the network think here. with the and side, products and hit side, seeing international moving grain more up have helping fluid boxes do just our out I in the what carriers we intermodal volume Dallas that they've we're on But international They going that saw, I'm We put that. mentioned lot That's on there domestic ocean don't stack with largest of and those quarter. I a first we because down have they're the More to in The you just record

And so move can good we about that feel inland. that more we that, of

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

cost. fuel down, help other think could Just year? course that sort the you other curious, Other some what purchase transport. than of be other over the would improve expense productivity like volume-dependent, things are than to levers I may the cost you of to volume, talked be OR drive use or about going Obviously, of

to trying a sense. Just get

It's question, Jordan. a great

in size. gain then volume. state in In in we're they're you about as a one lines progress storage, about there still which right fleet fact XXX we're seeing The certainly I quickly storage big can them and that locomotives taking our we be every nearly positive is in now, So way. it's but the the impacting a and our prepared comments, think with that putting they talk to of ones that cost starting mentioned

do we you snap was we first do, really means because right, mentioned Next we from how right came reason progress utilization, which over we making no consumption. being time. out to about us, which and that the with actually over though after From was that with we're of behind in certainly do to sure even fuel we certainly January. everything judicious stretches crew look deadhead you there, rates focus and January, our that that, on -- of there's recrew about quarter think use that if it's all the great saw okay, And we by February kind very back strong. shouldn't to encouraged that weather I'm March weak, at time

So but listed the I've others, biggest it's ones. those

is Cowen. of Seidl Our question next line from with TD Jason the

it terms you quickly term, pressures some got Two a hopefully is the do said if else I Would think pressured labor things. do think diverted? situation, it would port Kenny, I in near some we in industries. I Coast And of mean come being a love there. there out what West quick take think few hear you were freight to much you get the would And also your or resolution time? how back intermodal. here, pricing understand in of

Yes.

is intermodal, talk one I want roughly get And price. of that call half just I publicly, business, reiterate customers we've of think just said the domestic I that of markets broad outside before we've that got your to which year it, we get So to particular we a approximately question, market. touch every that about diverse set and

the place But that. teams to done spending putting impact lag going business there. industry in hey, understand leaders, the they a candidly, articulating, the on quite a is the have fabulous few side the really sales we're We're what's CapEx. And there labor a negotiations. commercial job resources a and inflationary the are our experiencing out taken with out pressure. They Now bit quite on labor same

So that you've got piece.

seeing of of bit loose pretty RFPs. Now intermodal talking quite We're intermodal truck a suite got there compete mechanisms that our customers other out the confidence. place fact are the been domestic strengths capabilities, we and market, part up, and in market it as that that intermodal, and which the domestic quickly is upside. our has in own win business bids about We've to of can based that tightens yes, that's for go capacity there. And their capture us give and on a

Kenny, ports Coast And about last Jason's question and West ILWU.

an I'll challenges. contact near because they of away We've hard West with to be of tell diverted been Coast Yes. it's what's believe agreement some quantify port, should term. been close in and there the look here that becoming at it you the that year-over-year call we the we looks Coast negative like delta it, you West book saw I'll out to, order these going when is less tell ports, the less. I'll labor and

That's everyone on you good. that, because knock that quickly again, back And come think over it you was would or there wants would an agreement, back that wood, time? receive

it, that's be good Jason. but wouldn't just think I precise, probably that just to positive idea. be about precise, I be We be a -- can't could

Our of is Ossenbeck next from with question the Brian line JPMorgan.

that reset. pricing thought? little Do had the price/mix. you the more look because to is Is Is here a expect that going at And of you'd with same here? So impact on follow-up kind question little worst going I than volumes is as bit near different you may of a probably a guess weaker of end as be you term the sort accelerate they're a just as still the Kenny, that markets lag bit in expected? developing? have

Certainly, the Yes. helps us. way we volume calculate improving price and increasing

is and not because I'll So also December. say April that it

have year. that say move areas where we we that capture domestic volume pricing other We are throughout taken approach are we're And in the some with in take in to those that market. intermodal. have harder there time align We've the than our the sure in there risk would mechanisms markets to we've some disciplined as in some get very all not to been towards make play that cases, I price to price. of place more

be to -- Kenny, coal And degree is in gas a where some pricing. about domestic natural you what said a you've truly the intermodal can same got lesser driver of

be gas We'll watching closely. natural Absolutely. pretty

a question, to negative your that's growth the see intermodal primarily the changed Brian, that coming year, bit. to is expecting the Obviously, likely part mix Yes. mix fact into more be the were view side. year, would throughout the that on we of And around our

bit quarter a looking And so probably the of a to at positive least, second mix. we're expecting

talked came it's do today is and I think we here we you that, January. in as Beyond to different But soon say. when than I too something that's that think sit to

of regulatory coming follow-up a of quick out for the A noise on Just D.C. side. and legislative Lance lot

to are UP Some safety lengths. it of topics We that down comes stats things the and tend specifically. being of there. the on focused most you on when It's earlier discussed to Safety issues it when recently. last to the over being hear we've should few months? topics comes I various what But that just wanted industry after on and thought the the discussed in we FRA you the safety Advisory to train on But seen the obviously what was important you are focus an focus some mentioned what different

great Yes, question. Brian. That's a

wouldn't. terms since XXXX, and the it would on we XX%. engaging length train point, difference understand move effort in So like Statistically, down where in wouldn't. actually help train something XX% in make To are safety, would UP, length what where D.C., ball derailments mainline legislators your of regulatory in siding and a is our the up them

there's corollary length So derailments. zero train between and

things and can That's another other has is a detection. emphasize, to that redeployed wayside conductors around are crew one that right there empirically. where the corollary now in. that FRA really help they impact, the have on on place impact a are step But can whether the That with. size We're world no we don't Things taking action ground. safety

is stay that So them we engaged. just right engagement deeply broadly try This all a now. the time and to deep help understand

from is with the Allison line Poliniak question Fargo. next Wells The of

to of quantify there's new onto moving is seeing wins terms of then any conversion want business. there that you're notable I And the lot bringing new a the pipeline, in with volumes, new maybe contribution parts way trends of just ask any business the the terms of volumes. that, second, in part sort in the the understand as just first, of in I rail? us business guess, on help to I business on of -- or new know

it's obviously, Midwest new you us. of and Been emerging pretty It's move attractive West, biofuels, teams, sites to those renewable going diesel ability our if land for to very margins our out broad it, are to business of an Yes. in at meaning production all by encouraged market. the look us three the is into because, customers, new

same down On and look that to and areas and of as in the are is growth the the at as are our metals thing related positive, Those to population they the true some Gulf. Same that. we structural Louisiana rock. minerals business have business increases with side, industrial tied Texas,

and great. are again, new recent capable go our some the of -- that business Allison, it intermodal of got our aware, really and a are sector. you we've you are out and marketplace. we over those And grow of in highly the feel we fleet the our nicely customers so UMAX then complements aware have that And that blast very in products wins UMP can And road, E&P

on And just of the business color any there? the opportunities trends out conversion new

an forecasted amount thing The us. is they the there. still are that is pipeline see that eye told we're keeping actually on moving initially We the they

So no committed concerns the pipeline, a volume sure to bit making with that with still the little of there. concern they is just

of is Mehrotra Amit Deutsche Our with the from Bank. next question line

because line something And like XQ benefit lot like move going and or big the we fuel. XQ, Jennifer, lag to are XQ? Because a on of in you calculate that. earnings going to there's be that up a from of EPS as the fuel $X.XX away in is it

from starting if of build to I back there's XQ. move of because from you're from grow can kind XQ And actually understand of growth cadence weather, just but that the hole a so I'm impact operating trying income to you earnings from on as know in XQ to XQ fuel?

did average better. lot for XXX,XXX And under quarter and last weather then because week, related volume a be all seven-day this, the fulcrum of the the think weekly that, you seems is to just in I volume was to that, carloadings, and the

-- some of you actually quarter, we the you average big to are weather that to problem we are exited see going carloads? going like see the in up in guess the is than for when question I a so really if the quarter, show And volumes weekly when was the lower

math agree let's so your Well, the right. the off with $X.XX start the fuel first on on exactly we for That's piece. And quarter.

You have two fuel pieces, to in think Amit. about

a when surcharge paid to think right piece fuel our for we a about expense You call piece prices piece. now, first $X we ago, that's gallon it have to year the in on while a flip as the what and are positive, the going fuel was And at us. current the $X then quarter, fuel a gallon look surcharge

to that so is a have well. is going expense but as less going And dynamic, to be fuel our different

parts those two would And that so out, and you about in really separate analysis. have the it I to think in say,

was remind million sale, thing about from and everybody casualty last want in Tollway, results. of also to a Illinois expenses. some extra year land have I in we an And benefit other XQ we that then was our did had $X.XX $XX The

away. goes that So

sure you're make everybody want and to some but that just there, takes So thinking I is together. of putting puts you've got as

the going will that of do And and the guidance as earnings that. is much network, give we be goal volume be to it can going on continue as output specific product. to to you drive efficiently can the output we service of not Our as that. the across improve I'm to as

then question factor other an does think on to need holiday. in Easter volumes, you our impact I And have That to your about volumes. the

have into we And did again, us. be there. volumes so that think, the to are and we're was place, assets yes, a clearing, holiday we're And the while, putting available weather to I impact going moving

reported and beyond. Yes. about in I'm confident we're what week numbers this talking

just is view to in And fuel, are there's ex know Kenny, that, line Okay. That's intermodal kind I noise that expectation But fuel? a don't we you on a And intermodal over yields. have know of yields the of on if great. quarters? holding I related in fuel. yields next the intermodal few lot

go to we'll we the And compete said have we retain in I feel Amit, about, good with be move more and their strengths. also good for able about again, as capabilities markets that on move based and I real this, their time place mechanisms there And the to it. win our really Yes. and and feel customers business out

And so positive us. for that's a

next ISI. is Chappell Our line from of question the Jon with Evercore

I laid which peers mean targets, getting to to full relates I of one has fluid of cost as your seem every want network just from go year productivity, the Eric, to quarter. kind a to to it could a out perspective. back go But these to back what

Is weather improvement improvement this you training. of out productivity They're start to any there three the taking a can story? And significant Or contribute still of half you way quantify out timing? productivity any digging You're of kind second in understand way type also to us for final mostly. is some the like think So people still of for what the improvements in could quarters you 'XX? to the XQ? get XX%

the others the you that we'll Now based the would on Obviously, rest and productivity specifics reinforce guide Jon, year. grow me that and the see is right What the thank throughout of to now, performance won't you that for the question. we that on I see timing we the railroad greater it's of the continue bringing to confidence productivity. on greater

to you as going headwind To behind say the that. being to able what's the us second the the forecast of look drive and of quarter, that's -- winter volume, into grow

to sure not to Beyond we drive I'm safely. making going We're that, all just that on guide that productivity it. focused

range? Any the even just mean, of and way go the out starting broad broad Investor in we kind point range to if that back of numbers? Day I any parse there, a to

No. think I do Jon, that be would for unwise that. us to

We pace are improvement. not going our to to productivity try

as we quite the across to the product so drive frankly. ultimately want while we safely providing fast fuels it can, good and network. can that can a productivity, really do as that service And as as so we That's real volumes greater we the leverage,

Lance. is this Jon, Yes.

on So that. just putting bow a

there. created fluid costs of squeeze a that of then of stretching productivity by Our really beyond productivity from bunch network, QX to then weather we XXXX a out the and kind we start legs our recover start events. of continue the and, some to ultimately, excess from those expectation and And with all in growing QX is, forewent in the variability we

amount of got year. us front offset fair to in this going inflation that's and that of a next got We've we year into

So we're year going whole as battle well. to that through fighting be the

the And question from line next Shanker with Morgan the [Operator comes Stanley. Instructions] of Ravi

kind on for does significant improvement better and in counting if there? pretty headwind know year? in full inflection, are macro guide, the could of of to that the I was is half kind not, dollar dollar can X.X% for very down to how to the second, two versus your restock going involve above assumption a have kind And One you here. a conditions you what year-to-date the But inflation that volumes Are and/or get a kind get first change X.X% down confirm So quick year? an And first the quarter? does you're quarter. trajectory year running in price macro than of you second follow-ups currently that you of mix of if was

first quarter Kenny? did of yes, first the the our inflation. hit pricing in question. part And gains our I'll your exceed

second. a Just

do to and whole need And we what in this have not to don't we what planned need first not to a need be to first recession, In continue They i.e., macro down to quarter, the it's crazy. problem They healthy we Absent need consumers reasonably, after economy to we the terms we be recession pull do in destocking a assumptions, half. right? just some. us. behave doing. And a to continue calm to spend go for industrial to would just that, their need horns. inventory have markets of So is continue

pretty wild I a The those, are expectations. of reasonable All card be recession. think, would

is question line Our of next Barclays. Oglenski the with Brandon from

like one know or XX% issues, much there the Lance plan And question higher for there's carriers are level. remains My definitional there in compliance delivering than that. but I your low out Eric, on trip manifest

about this for get So I to And what lot wonder products compliance? -- steps the right a plan we've call service the there? on talked today. are target What's trip

Yes.

where starts autos. on focusing so us a our that they're a that are feedback XX%, expectations. in XX%, we says their and with When So that right, the place customers X, giving meeting are manifest that's

is auto sure conversation far there, those the actions. just to weeks simply those last doing It's as lag we and are and always cars longer. it's to make TPC, a that intermodal were manifest the steps of cycle two as have the going Now because you're having to get time we

you that's that's trains, you in our the use to velocity at discounts, look picking when the tailwind So When up. right making at are look terminals we a means to connections the which up, it.

TPC we're in customers difficult, send but for And the was right Just to we're those and the possibly benefit to now that driving first a understand message because we in it's two direction. things their our better can want alone ours. as quarter we that drive fast as place we in

The Spracklin the next line with RBC. Walter of from is question

railroad than when want to levels the back historically, a almost industry of the service promptly address metrics service spotlight always and just back come for whenever Union Clearly, deteriorate to Pacific service is operating the from the bit rather to whole a I under issue, regulator included, needed regulatory And improve. look issues. spotlight. I a is the

good So I I I this you're seeing to don't now? an pretty a some was that for if numbers saw as come about expecting is was of numbers in year-over-year more event know as you you best Easter or a opposed exit said you -- Jennifer, weather QX, behind what you, are OR improvement on of question event it based fundamental. trends is to early know more as anything but to want back QX a

address would QX your of you as the So and the to rest year? continue efforts to service see QX improvement improvement track that yourself should through achieve despite that, on

will we our that make going I is we stick that. and I'm that XQ our Walter. obviously, to quickly, full can temptation got has guidance. to guidance But the Yes, that resist And and the year-over-year, and do give we're it's the you with confident to improvement year to all do math. mean you be at that some And point, very sequential. to be and is focus. intent, have

fair? is -- quickly And barring quick that that if turnaround and year-over-year see Is risk Okay. you that you're perhaps then the that if at Jennifer. can't mentioning as

I longer Yes, that gets go agree the you more difficult. that. with The it improvement, into year will with

from the Majors Our next question is of Susquehanna. line Bascome with

months, oxygen talk it few when And them oversight expires a with most that And how your be think XX you they'll deal focused? service any you period their do the and here? walking of you And that months? STB where next bit over weeks service last period little stops room? CPKC with how how do forward expectations few as a in maybe XX to in -- up relationships extend the eyes has sucking will engagement engage evolved the the the about sorry, Can

Thank you for Bascome. question, the

deeply an better the day, or every What customers' are conversations are the at virtually we So level and staff down. now engaged certainly interaction executive with demonstrably, a week. temperatures service helping is STB is product STB. is in several right an either those There is, member

to and last the the I on use, our the last late an use recall, customers, progress more we back where railroad getting confidence to rare. the continue. commitment importantly, XX% at was embargoes. to of if reduction reduction this Pacific STB a there how STB year, have and thing, at towards to hearing XX% of they're that Union place the going eye a and getting made as embargoes in we, our have that focused that look is other going you both And year, use we're essentially months The two all And world better. Year-to-date, the to in kind the in is the

the purview. that's But what I prompting our point, into for, is from more wildcard. that's the and STB industry in predict this feedback, bit at where and to they've of temperature they're reporting what product That's STB service expect significant what -- not I May is their done their scrutiny what customer a to a customers. they period. XXXX. react is certainly I coming in built And the is the service in won't a So Union overall as know do Pacific and regards place that's

a STB. product takes it, to lot of in with get fact the pressure service out customers the good with place they're a So we if that can that dialogue us satisfied the and on where the

there? And do maybe make protected customers' are sure you your how the the over months, to most? focus they interest you that longer-term next part do and think where And of XX that XX shareholders question will

Yes, Bascome.

they've working of of very out they're we dispute the alternative which some coming make good are, justifiable like an versus hard to understand data help of and in those with a are what rate keep mechanism, with the for then, trying we engage eye those them, things docket makes of accomplishes regulation resolution review rate-setting and front the what the fulsome And on use ramifications mechanism, offer the rail we're this revenue access, what sense adequacy that the STB industry. accomplish, to of course, are and open things the STB as -- final forced is got decision in them sure product is fact. So service fulsomely is of them not that what by and to growth is points

from line Suisse. Rosa the is Credit Ari with question of Next

Great.

don't the think thoughts think was touch So future of you're perhaps to perhaps grow you of was most next take bigger you what in are you And how you of I where step reflect accomplishments I go of XX time particular, really or I could over color then, as final Lance, the see you at transaction. a hoping that? ability five on you'd and what the like picture, and Maybe proud the take hoping your on I on a it. here? kind back estate bit was could could about months, real of to quickly, just saw as give the your of And UP, share CEO wondering UP I years. on was approach volume railroad the the from and quarters

Yes.

In Ari, terms real the transaction, of estate fiber it was a deal. optics

in over in they working eight the of moving it a on of a look last back model, thing very proud nine, course way much to customers over where most as I four the of that a is we damaged moment. a just the benefited years last now it. year transmission the doing what you team question years If accomplished the from the terms have and reflect thank doing for the by PSR our weren't to Ari, transition, opportunity plan I'm and our And were

stupendous done we've think sustainability. I work on

the and done be form. work We've Schneider work that hub, in wonderful XPO are right stable a we've done IMCs partners, in on current in now its recognized our really As and inclusion. to good We've grow. that got world-class in of to and equity We're Knight-Swift setting able my in ourselves opening on I and diversity, in comments, mentioned industry communities. for terrific up

really really, with that. I'm So pleased

I we able the As into grow. poised are future, to look to be

We stable grow get and all have That blew our resources year, our to that issue and our us our the have we part to right in X have of be will that. service with up the customers. fact last consistent deliver we degree. us part and means that wrong They But want tell time. We as reliable them world for got a they to the they consistent be and one to we product. critical

is and benefited and in and on and are in product us choice way potential choice, concept meet strategy, our I It's our marketplace in and grow Their from the allows it know use where with the is win with is serve rail So do that and there. together being of straightforward. consistent, the simple more, growth that executing it. customers' to needs. think of supply four the a We chain want our partner ready really it. sound, service, provider service we're reliable the all to with products that we of strategy the stakeholders Do

with line of from is Bernstein. next The question David Vernon the

Jennifer, of questions for a couple you.

you XXXX, give is the giving guidance for year a And basis, inflation all sort of as the mechanics full is Or put additional numbers is around business? you from package? can underlying you're for about that think comp the fuel? there of OR in year us there Within then a some improvement, and just that cost some improvement added PTO to what enhancements to the on absolute being in compensation full and XXXX

So we for the negotiated those And that what would we for into XXXX. be guide to account and And mid-single takes said to up in things leave. sick comp still X% said guide, we plan on for inflation the inflation our digits. negotiate our in terms employee hold was paid terms of and side, have of

those component. the how we're product there. for really of going In basis moving winning going is is appropriately we going where much focused. what and to other be we're that's efficiently. to to control over Fuel that's have and business, be it terms it obviously how to in We're a go it's very Fuel the items going it is mean, there levers, going new I the be. after it we're the will a have service to But that component improve, we pricing. and greater get the pricing

the for quick think at you And you then FTE of are just targeting about count where XXXX? a be sort Eric, maybe, to follow-up, as year, business full the the year-end as

think that question. answered Lance already I

for back levels this volume to we terms roughly were hiring going similar similar watching they came the assuming from roughly of -- into in year. that what Our a is Attrition the be are year that half. We're year really last standpoint. roughly to happens in

the with Our of Jairam Daiwa. final Nathan question line is from

a need risk EV -- of UP given -- within just the to I as need EVs? the had penetration. on make do question to you fire does And investments batteries

say we that seen now. I'll have that risk right not

there. relationship the enjoyed we've close very have We growth leaders with EV

an forecast sure need do can Our and anything then size from and move on prepared and the what and looking we handle the to ramps faithfully. that those make at and perspective those we're EVs, investment we do to off are the ramp and efficiently it

Yes. have think we fundamentally, answer of on our a not based EVs. seen shipments Jairam, shift in the risk I is

for no are like questions further There Mr. this Fritz at to closing I over time. would the floor comments. back turn to Lance

you May owners thank We're for today our meeting. Until joining then, care. take annual and looking again Rob, with in you, questions. thank all talking And for your our us and forward to at

This concludes today's conference.

You may your disconnect you time. your lines Thank for at participation. this