Bill Stephens
FORT WORTH, Texas — BNSF Railway posted what’s believed to be a record low operating ratio of 59.7% for the third quarter, despite deep declines in revenue and volume due to the economic impact of the pandemic.
BNSF’s third-quarter operating income fell 8.4%, to $1.8 billion, as revenue sank 14%, to $5 billion, the railroad’s corporate parent, Berkshire Hathaway, reported in a regulatory filing on Saturday. Overall volume declined 8.3% in the quarter.
BNSF reduced its operating expenses by 18% in the quarter, however, which helped improve the operating ratio by 2.9 points compared to last year’s third quarter.
Revenue from consumer products, which includes intermodal and automotive traffic, fell 4.5% despite a 0.5% increase in volume. “Increased retail sales and inventory replenishments by retailers, along with increased e-commerce activity in the third quarter resulted in higher domestic intermodal volumes for the first nine months of 2020,” Berkshire said in its filing. “International intermodal volumes and automotive shipments remained low primarily attributable to the COVID-19 pandemic.”
Industrial products revenue tumbled 25% as volume sank 23%. Berkshire attributed the declines to pandemic’s impact on industrial production and reduced demand in the energy sector, which drove lower sand and petroleum products volume.
Agricultural products revenue grew 1.7% as volume surged 3.9% thanks to higher grain and meal exports. The overall gain, however, was limited by lower demand for ethanol, sweeteners, and soybean exports.
Coal revenue fell 35%, driven by a 25% decline in volume and lower revenue per unit.
