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Trade uncertainty, bad weather hitting rail shipments, Union Pacific CEO says

Jun. 19, 2019 6:45 PM ETUnion Pacific Corporation (UNP) StockUNPBy: Carl Surran, SA News Editor21 Comments
  • Union Pacific's (NYSE:UNP) shipping volumes are declining ~4% this quarter because of poor weather and customer concern over trade uncertainty, CEO Lance Fritz tells WSJ in an interview.
  • The CEO sees the economy as fundamentally healthy but that recent flooding in the Midwest and increased caution among industrial shippers are weighing on UNP's top line.
  • Shipping volumes across the railroad sector have been falling this year: Carloads fell 2.1% Y/Y in May and then slumped 9.1% and 4.6% in the first two weeks of June, according to the American Association of Railroads.
  • Coal shipments, the single biggest commodity on U.S. freight rail networks, have dropped 5.3% YTD, and the business has fallen at a steeper rate this month, the AAR says.
  • "We believe coal is not going to grow back to what it was historically," Fritz says, but UNP's "franchise is so broad and diverse that... there's almost always something that's doing well. Right now, it's the Gulf Coast chemical franchise," referring to petroleum and petroleum products, which the AAR says rose 25.9% last month compared with May 2018.

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