Union Pacific CFO Says Economy Appears To Be Stabilizing
10 September 2009 - 1:29AM
Dow Jones News
Union Pacific Corp. (UNP) Chief Financial Officer Rob Knight
said Wednesday the railroad's recent freight volumes have been
improving, echoing recent comments from some other top railroad
executives.
Knight, speaking at a Webcast Dahlman Rose & Co.
transportation conference in New York, said Union Pacific's weekly
freight carloads have been averaging about 163,000, off nearly 18%
from year-ago levels but well above an average 142,000 in April and
May.
"We do see a few signs of hope," Knight said. "Recent economic
indicators point to continued stabilization" amid what remains a
weak overall environment.
Union Pacific said in July it was bringing back into service a
portion of its stored railroad fleet in anticipation of firming
freight volumes. Railroads, which are considered barometers of
overall economic activity, have idled thousands of rail cars and
locomotives this year as the broad downturn dried up demand for
freight transport.
Knight's relatively upbeat comments Wednesday came on the heels
of similar views Tuesday from Burlington Northern Santa Fe Corp.
(BNI), Norfolk Southern Corp. (NSC) and Canadian National Railway
Co. (CNI) at an RBC Capital Markets conference.
Canadian Pacific Railway Ltd. (CP) provided a more pessimistic
outlook during the conference Tuesday, saying it has seen scant
evidence of improvement.
Regardless, Union Pacific said Wednesday its volumes have
rebounded a bit in several markets, although Knight stressed the
company's volumes still remain well off year-ago levels.
So far in the third quarter, for instance, volumes in the
chemicals sector are down about 16%, compared to a 21% slump in the
first half of the year, he said. Intermodal volumes are off 14%,
compared to a 20% first-half decline, and automotive volumes -
aided by the popular "Cash for Clunkers" program - are off 26%,
compared to a 48% first half drop.
Knight described himself as cautiously optimistic that the
deterioration in Union Pacific's freight volumes has at least been
stemmed, although he noted that plenty of market uncertainty
remains.
He also said inventory restocking ahead of the important holiday
shopping season "is going to be at a lower level" than in some
previous years because the railroad hasn't seen much impact from it
yet.
-By Bob Sechler; Dow Jones Newswires; 512-394-0285;
bob.sechler@dowjones.com