OMAHA, Neb. — BNSF Railway’s first-quarter revenue and profits declined as traffic volumes sank due to the COVID-19 pandemic, the railroad’s parent company, Berkshire Hathaway, reported on Saturday.
BNSF’s pre-tax income declined 4.9%, to $1.6 billion, as revenue declined 6%, to $5.4 billion. The railroad’s operating ratio improved 0.6 points to 65.9% as expenses fell 6.7% in the quarter.
“BNSF’s service, velocity, and cost performance improved significantly in 2020 compared to the first quarter of 2019, when severe winter weather and flooding on parts of the network negatively affected revenues, expenses, and service levels,” Berkshire said in its regulatory filing.
The railroad’s financial results reflected a 5.2% decline in traffic volume and a 0.6% decrease in average revenue per unit.
Volume in BNSF’s consumer products segment, which includes intermodal and automotive traffic, fell 7.2%, while the segment’s revenue sank 11.8% due to lower average revenue per unit.
“The volume decreases were driven by lower international intermodal volumes as the COVID-19 pandemic contributed to lower U.S. West Coast imports,” Berkshire said. “Volumes further decelerated late in the quarter in the domestic intermodal and automotive segments as the COVID-19 pandemic’s impact to U.S. consumers intensified.”
Industrial products revenue was down 0.5%, with higher revenue per carload helping to offset at 2.3% decline in volume. The volume decline was largely due to lower frac sand volumes as locally sourced “in-basin” sand in Texas pushed out more expensive sand from the Midwest.
Agriculture volume and revenue both rose thanks to higher domestic grain and soybean meal shipments. Revenue grew 2.8% as volume increased 3.3%.
Coal traffic slumped 7.7%, which along with lower revenue per carload pushed revenue down 11.9%. Berkshire said volumes declined due to “the effects of low natural gas prices, mild winter weather, and plant retirements.”
Berkshire said the COVID-19 pandemic has created economic uncertainty that will affect the railroad’s volumes and revenue.
“The pandemic continues to rapidly evolve, and the extent to which it may impact BNSF’s business, operating results, financial condition, or liquidity will depend on future developments which are highly uncertain and cannot be predicted with confidence,” Berkshire said. “We believe BNSF has sufficient liquidity to continue business operations during this volatile period.”
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