Revenue, expenses higher in BNSF 3Q

Written by Stuart Chirls, Senior Editor
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BNSF photo

The uptick in rail freight meant higher third quarter revenues but also higher expenses in the third quarter at BNSF Railway.

Operating expenses grew 20% to $4.04 billion for the quarter ended Sept. 30, while revenue totaled $6.15 billion, up 16% from the same quarter in 2017.

Operating income was $2.11 billion, up 9%, while net income came to $1.39 billion, ahead 34% on-year, the Fort Worth-based company, a unit of Berkshire Hathaway, said.

The operating ratio climbed to 64.5% from 62.4%.

Average revenue per car increased 11% on changes in the business mix, higher fuel surcharges, and increased rates per car/unit.

Freight revenues totaled $5.8 billion, an increase of 15%.

Agricultural shipments led all gainers, up 16% in the quarter, on strong export and domestic traffic, and higher volumes of fertilizer and other grain products. Petroleum helped drive industrial products better by 13%, along with rocks, steel, plastics, sand and taconite.

Consumer products edged up 1% as economic growth and tight truck capacity saw more highway traffic move to rail, along with higher imports and containerized agricultural product exports, partially offset by an unspecified contract loss.

Coal shipments fell by 5% in the third quarter, mostly due to power plant retirements and competition from natural gas and renewable energy, partially offset by market share gains and improved export volumes.

Compensation and benefits expense increased 17% on higher wages including a change in estimate of a pending labor agreement recorded in 2017, increased headcount, and higher training costs.

Fuel expense jumped 44%, due to higher average fuel prices and increased volumes. Locomotive fuel price per gallon increased 36% in the third quarter, to $2.31.

The company also cited higher purchased transportation costs in its logistics services business, and increased intermodal ramping, drayage, and other volume-related costs.

Categories: Class I, Freight, Intermodal, News Tags: ,