BNSF Posts 12% Revenue Decline in 2Q23

For second-quarter 2023, BNSF revenue came in at $5.828 billion, down 12% from the prior-year period’s $6.640 billion, reflecting lower volumes of 11%, the Class I reported.

Operating income for the second quarter and first six months of 2023 was $1.8 billion and $3.7 billion, respectively, decreases of $569 million (24%) and $754 million (17%) compared to the same periods in 2022, according to BNSF, which released its second-quarter 2023 earnings statement on Aug. 7. Operating ratios were 68.2% and 68.3% for the second quarter and first six months, respectively, increases of 5.0% and 4.4% compared to the same periods in 2022.

Total revenues for the second quarter and first six months of 2023 decreased 12% and 6%, respectively, compared with the same periods in 2022, reflecting lower volumes of 11% in both the second quarter and the first six months of 2023. Average revenue per car/unit decreased slightly in the second quarter, while average revenue per car/unit increased 6% in the first six months of 2023 resulting from higher yield.

Other second-quarter 2023 highlights:

• Consumer Products volumes decreased 16% for both the second quarter and first six months of 2023 compared with the same periods in 2022 primarily due to lower west coast imports, the loss of an intermodal customer, and competition from lower spot rates in the trucking market which has impacted domestic intermodal demand, partially offset by an increase in automotive volume from higher vehicle production.
  
  
• Agricultural Products volumes decreased 8% and 5%, respectively, in the second quarter and first six months of 2023 compared with the same periods in 2022 primarily due to lower grain exports, partially offset by higher volumes of domestic grains, renewable diesel, and feedstocks.
  
  
• Industrial Products volumes decreased 3% for both the second quarter and first six months of 2023 compared with the same periods in 2022 primarily due to lower demand for chemicals and plastics and lumber as well as lower shipments of petroleum products resulting from refinery outages.
  
  
• Coal volumes decreased 3% and 4%, respectively, in the second quarter and first six months of 2023 compared with the same periods in 2022 primarily due to moderating demand as a result of lower natural gas prices and weather-related impacts.

Operating expenses for the second quarter of 2023 decreased 6% while only decreasing slightly in the first six months of 2023 compared with the same periods in 2022. A significant portion of the decline, BNSF says, is due to the following factors:

• Fuel expense decreased 35% and 16% in the second quarter and first six months of 2023, respectively, compared to the same periods in 2022, primarily due to lower average fuel prices, lower volumes, and improved efficiency. Locomotive fuel price per gallon decreased 28% and 10% in the second quarter and first six months of 2023, respectively, compared to the same periods in 2022.
  
  
• Compensation and benefits expense increased 13% and 10% in the second quarter and first six months of 2023, respectively, compared to the same periods in 2022, primarily due to increased headcount, wage inflation, and lower productivity.
  
  
• Materials and other expense increased 33% and 27% in the second quarter and first six months of 2023, respectively, compared to the same periods in 2022, primarily due to general inflation, increased casualty and litigation costs, higher property and other miscellaneous taxes, as well as lower gains from land and easement sales.
  
  
• Purchased services expense decreased 11% and 9% in the second quarter and first six months of 2023, respectively, compared to the same periods in 2022, primarily due to lower purchased transportation by our logistics services business, partially offset by general inflation.
  
  
• Depreciation and amortization expense increased 5% and 4% in the second quarter and first six months of 2023, respectively, compared to the same periods in 2022, primary due to higher capital expenditures.
  
  
• There were no significant changes in equipment rents.