OMAHA, Neb. — BNSF Railway’s pre-tax profits increased slightly in 2024 as traffic-mix changes — more intermodal, less coal — and lower fuel-surcharge revenue offset an overall 6.5% increase in freight volume.
For the year, BNSF’s pre-tax earnings increased 0.5%, to $6.64 billion, while revenue declined 0.5%, to $23.35 billion, the railway’s corporate parent, Berkshire Hathaway, reported on Saturday.
BNSF’s net income declined 1.1%, to $5.03 billion. The railway’s operating ratio was 68%, an improvement of 0.4 points.
For the fourth quarter, BNSF’s operating income increased 12%, to $2.16 billion, adjusted for the impact of a $290 million agreement with the SMART-TD union that allows the railway to redeploy brakepersons to conductor and engineer roles. The profit increase came despite a 1% decline in quarterly revenue. The fourth quarter operating ratio, adjusted for the SMART-TD agreement, improved 4.1 points to 64.6%.
“Fourth quarter earnings benefited from higher volumes, improved productivity, and cost controls,” BNSF said. Overall quarterly volume was up 7% thanks to increases in intermodal, industrial products, and agricultural shipments.
The full-year revenue decline, Berkshire said, was primarily due to a 6.6% drop in average revenue per carload, which was attributed to lower fuel surcharge revenue and changes in business mix.
Operating revenues from consumer products — which include intermodal and automotive shipments — increased 7.1%, reflecting a volume increase of 16.2% and lower average revenue per car/unit. The volume increase was primarily due to higher intermodal shipments from west coast imports and volumes from a new customer.
Industrial products revenue declined 1.2%, reflecting slight declines in volume and average revenue per car. “The volume decline was primarily due to lower aggregates, taconite, minerals and waste shipments, substantially offset by higher plastics and petroleum products volumes,” Berkshire said.
Agricultural products revenue increased 4.5% as volume rose 7.4% due to higher grain, renewable fuels, and fertilizer shipments.
Coal revenue fell 22.5%. “The decrease was attributable to a volume decrease of 17.9% and lower average revenue per car/unit. The volume decline was primarily due to lower natural gas prices,” Berkshire said.
Berkshire Hathaway Chairman Warren Buffett didn’t have much to say about BNSF in his widely read annual letter to shareholders. “Berkshire’s railroad and utility operations, our two largest businesses outside of insurance, improved their aggregate earnings. Both, however, have much left to accomplish,” he wrote.
Note: Updated at 8:15 a.m. Feb. 25 with additional detail about BNSF’s fourth quarter earnings.
Having worked for a Buffet owned company (a utility, Pacificorp, now owned by Buffet’s Mid-America Energy Holdings Corp, MEHC) as long as things are not in sustained negativity, Buffet will be happy. He is the one that said, “Utilities (and Railroads) won’t make you rich but they will keep you rich…” And as long as BNSF does what J B Hunt tells them to do, that will continue to happen… Many, if not all of the other class 1’s all wish they were privately held as well, then they could tell Wall Street to go do something physically impossible!
Who is this new customer BNSF got?
Maybe the new JB Hunt deal was great for volume, but the margins are a little too thin. Plus BNSF just brought a bunch of motive power and employees back into the mix, which costs money.
That’s what you get with the wholesale IMDL proposition.. If RR’s want to earn a greater ARPU they need to think about either, in house drayage (balanced dray loads both ways this is where the revenue is made). Or BNSF Railway (not the holding company) needs to purchase JB Hunt, and make it an Internal subsidiary..
UP actually has the best setup right now to accomplish this with its rail controlled EMP/UMAX box fleet. all UP needs to do is setup LOUP Logistics as the drayage provider and more revenue will fall to the bottom line..
J B Hunt would probably be the ones purchasing BNSF, not the other way around. JBH has the leverage by shear volume. Were they to tell BNSF to take a hike there would be bloodshed in Omaha and the man we called “Rat Face”, Able, would be the one shedding the blood…
Unfortunately this makes it more likely that Abel, Buffett’s chosen successor, will make the BNSF go to PSR and let the service slip.