CEO PERSPECTIVE: Measuring Success by the Impact on the Many, Not the Few

Written by Lance Fritz, Chairman, President and CEO, Union Pacific

Lance Fritz, Chairman, President and CEO, Union Pacific

As part of a special series in Railway Age’s April 2023 issue, 13 chief executives of leading North American companies answer the single-most critical question: What is the biggest challenge facing the North American rail industry? Lance Fritz of Union Pacific is the sixth to share his perspective.

As I am in the last of my 23 years at Union Pacific, it is stunning to reflect on the change in our industry and at our company over the course of my career. I am forever proud of my time and the team at Union Pacific, but never more so than in these three years since COVID-19 first emerged. Despite the myriad of challenges that confront our industry, there are three guideposts I have found to be the best path to success.

Number one is delivering safe, consistent, reliable service day in and day out. We are nothing without it and it is the foundation of our ‘Serve, Grow, Win – Together’ strategy. Union Pacific is at the forefront of innovative technology, such as our cutting-edge APIs that offer seamless customer and supply chain integration; and our commitment to safety is unrelenting and ever-present, reflected in our industry-leading employee personal injury rate, which has seen double-digit improvement year over year. We know from recent events in the industry that this is more important than ever before.

Once we know we are running a safe, consistent and reliable railroad, we pressure test every idea and every decision against every stakeholder—customers, employees, communities and shareholders. Employees must be fulfilled in their work and feel valued; customers must feel like Union Pacific is helping them win in their markets; communities must feel like we are helping them solve their critical problems; and shareholders must be rewarded with returns that encourage further investment. If I have learned anything, it’s that any choice that appears to pit one stakeholder against another is a problem. We have the best employees and best rail franchise in the country, and with that comes the ability, and the obligation, to meet more than one objective at a time.

As leaders, as a company and as an industry, we have had to become more agile. What our employees value has changed. Lengthy labor negotiations overshadowed 2022, but Union Pacific ended the year with historic wage increases—our craft professionals received a 24% pay boost pushing average railroad salaries to $110,000 a year by 2025—and ensuring continued equal pay for women and people of color.

What our customers need has also changed. Inflation, supply chain challenges and fuel prices dominated how every company across the country, and the world, operated. Union Pacific harnessed the power of our network to serve our customers in new and exciting ways. We are reinvesting in our infrastructure with innovative technology to improve our network’s efficiency, productivity and service.

What our communities desire has changed as well, and we have needed to respond. We must be active participants in communities where we work and live, but we also have a bigger responsibility to our planet—and Union Pacific is an active participant in finding a solution. A net-zero future is one we all share, but at Union Pacific, we are making a meaningful and measurable difference, committing to reduce absolute scope 1 and 2 GHG emissions from our operations 26% by 2030 against a 2018 baseline on our path to net-zero emissions by 2050.

And when we do all this right, we are also being responsive to our owners—the shareholders. Union Pacific is delivering as the only U.S. Class I railroad that experienced volume growth in 2022, with the best return on investment capital and the second-best Operating Ratio in the industry.

The world is more dynamic and expects more from us. Putting our stakeholders at the center of our decision making helps us find the best solution. Ensuring every employee goes home safely, helping our customers get their jobs done, supporting and connecting our communities and building on our growth track record are what define Union Pacific and why I know our future is bright.