The company saw profits increase 7 percent despite a 2 percent drop in total shipping volume, with coal down 17 percent and agricultural shipping down 9 percent. The drop in volume was more than made up for by a rise in shipping rates and the increased traffic in chemicals (up 14 percent) and automotive products (up 9 percent) during the fourth quarter.
The decline in shipping volume was specifically tied to the slumping demand for coal. In the fourth quarter, Union Pacific moved 17 percent less coal than they did at the end of 2011. According to the Wyoming Mining Association, the market for domestic thermal coal dropped 20 percent in 2012 and is expected to drop another 20 percent in 2013.
Union Pacific Chief Financial Officer Rob Knight predicted that coal volumes will continue to decline slightly in 2013, partly because at the start of the year the railroad lost a contract to haul 10 million tons of it. However, Knight added that the overall outlook for 2013 is that volumes of all freight will increase slightly.
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