BNSF Railway's revenue, profits up for 2018 as industrial products shipments surge

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FORT WORTH, Texas — BNSF Railway’s revenue and profits were up in 2018, with industrial products revenue and volume leading the way.

BNSF’s annual operating income increased 9 percent, to $6.9 billion, on revenue of $23.9 billion, an increase of 12 percent, the railroad’s parent, Berkshire Hathaway, reported on Saturday and BNSF reported in its annual report filed on Monday. The revenue growth was due to a combination of 4.1-percent volume growth and a 6.2-percent gain in average revenue per carload and intermodal unit.

Expenses rose faster, however, pushing BNSF’s operating ratio up 1.2 points to a Class I high of 66.9 percent for the year. Costs were up 14 percent largely due to higher labor expenses as wages and headcount rose. Higher fuel prices also played a role, BNSF said.

BNSF’s industrial products segment notched 16 percent revenue growth for the year as traffic volume rose 9.8 percent.

“Volumes in 2018 were higher primarily due to strength in the industrial and energy sectors, which drove higher demand for petroleum products, building products, construction products, and plastics,” Berkshire Hathaway said in its regulatory filing.

The railroad’s consumer products segment, which includes intermodal and automotive traffic, posted 11 percent revenue growth as volume rose 2.9 percent.

“The volume increases were due to higher domestic intermodal volumes, primarily attributable to general economic growth and tight truck capacity leading to conversion from highway to rail, as well as growth in imports and containerized agricultural product exports, partially offset by a sizable contract loss,” Berkshire Hathaway said in its filing.

Union Pacific last spring gained the Ocean Network Express international intermodal contract. ONE was created through the merger of K Line, MOL, and NYK.

Agricultural products revenue was up 8.8 percent due to volume growth of 9 percent, offset by slightly lower revenue per unit.

“Volumes increased due to strong export and domestic corn shipments, as well as higher fertilizer and other grain products volumes, partially offset by a reduction in soybean and wheat exports,” Berkshire Hathaway said.

Coal revenue rose 4.3 percent thanks to higher revenue per unit. BNSF’s coal volume declined by 0.8 percent for the year due to utility plant retirements and competition from natural gas and renewable energy sources. BNSF did gain market share from UP in the Powder River Basin, however, and export coal traffic grew.

For the year, 35 percent of BNSF’s freight revenues were generated by consumer products, 26 percent from industrial products, 21 percent from agricultural products, and 18 percent from coal.

BNSF’s net income soared 32 percent due to the impact of corporate tax cuts.

NEWSWIRETrains News Wire

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