Union Pacific's coal and coke transportation volumes fell 17% year on year in the third quarter of 2019, driven by soft market conditions, contract changes, retirements and lower natural gas prices, the railroad said Thursday.
The Omaha, Nebraska-based company said its coal carloads totaled 263,900 in Q3, down 17% from 319,200 in the year-ago quarter, but up 10.5% from 238,800 in the second quarter of 2019.
Kenyatta Rocker, executive vice president of marketing and sales, said on the company's earnings call Thursday the decline in volume was due to "softer market conditions, resulting from lower natural gas prices and weak export demand. In addition, a contract change in the retirements also impacted volumes in the quarter."
"We also expect coal to experience continued challenges with volumes throughout the balance of the year and weather conditions will always be a key factor for coal demand," Rocker added on the call.
In the most recent quarter, Powder River Basin coal volumes made up 53% of the company's energy portfolio, while 17% of volumes came from "other coal." Frac sand was at 8%, while petroleum, LPG and renewables volumes made up the remaining 22%. The railroad no longer reports standalone volume and revenue metrics for its coal segment.
In the year-ago quarter, PRB coal volumes were at 56%, while other coal was at 17%.
Union Pacific reported net income of $1.55 billion in Q3 2019, down from $1.57 billion in the prior quarter and $1.59 billion a year earlier. The company's total operating revenues were $5.52 billion, down from $5.6 billion in Q2 and $5.92 billion a year earlier.
The company also reported a quarterly record operating ratio - operating expenses divided by total revenue - of 59.5%, down from 61.7% in the year-ago quarter.
