(The Journal of Commerce posted the following article on its website on February 17.)
WASHINGTON — Union Pacific Corp. will likely raise freight rates 5-6 percent this year from 2008 even as the nation’s largest rail carrier adjusts to reduced freight volumes.
Chief Financial Officer Rob Knight told a transportation investment conference that lower fuel costs and increasing competition for available loads will hold down rate increases in 2009.
Knight said trucking companies have stepped up pricing pressure in the intermodal business as companies lower their rates just to keep truck fleets moving during the economic downturn.
“In intermodal, there’s clearly going to be pressure,” Knight said Thursday at a BB&T Transportation Services Conference in Florida, and reported by Dow Jones. “We’re standing tall in making sure we get the returns on our business.”
The railroad’s overall volume has declined 19 percent from a year ago.
Union Pacific has capacity of about 200,000 carloads a week, but is currently handling 150,000 carloads, off about 30,000 from the start of the fourth quarter of 2008.
The railroad has parked 400 locomotives and furloughed about 3,000 employees. It also announced it will reduce capital spending in 2009 to $2.8 billion from $3.1 billion in 2008.
Knight said money and tax incentives in the federal economic stimulus bill also could generate increased shipments of housing and construction materials.