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Rail News: BNSF Railway
BNSF Railway Co.
reported second-quarter 2020 revenue declined 22 percent to $4.6 billion from $5.9 billion, while operating income fell 14 percent to $1.7 billion from $2 billion during the same quarter last year.
The Class I attributed the revenue and operating income declines primarily to an 18 percent decrease in volume. In addition, average revenue per car fell 5 percent during the quarter driven by a one-time favorable outcome of an arbitration hearing recognized in Q1 2019 and lower fuel surcharges, BNSF officials said in a financial statement posted on the railroad's website.
BNSF's Q2 2020 net income tumbled 15 percent to $1.1 billion from $1.3 billion a year ago. Operating expenses fell 26 percent during the quarter, to $2.87 billion from $3.88 billion. The decrease reflects lower volume-related costs, productivity improvements and lower costs related to improved weather conditions.
The Class I posted a Q2 operating ratio of 61.1 percent, down from 64.8 percent a year ago.
BNSF's volume decreases during the quarter were primarily the result of the COVID-19 pandemic, which negative affected volumes beginning late in Q1 and continued through Q2.
The decrease in volume during the quarter also resulted from the following:
• Consumer product volume fell 12 percent primarily due to lower international intermodal and automotive volumes due to the pandemic.
• Industrial product volumes fell 26 percent, primarily due to a pandemic-related decrease in U.S. industrial production and reduced demand in the energy sector.
• Agricultural products volumes decreased 7 percent, primarily due to the pandemic's impact on ethanol and related commodities and due to lower net exports.
• Coal volume plummeted 34 percent, primarily due to lower electricity demand driven by the pandemic and a mild winter, as well as low natural gas prices and plant retirements.