Union Pacific reported net income of $1.8 billion for the fourth quarter of 2024, up from $1.7 billion a year earlier, as higher rail freight volumes fueled record profits.

The largest Tier 1 railroad (NYSE: UNP) reported full-year net income of $6.7 billion in 2024, up from $6.4 billion in 2023.

In a conference call with analysts and media, CEO Jim Vena said, "We had a tremendous year in 2024 with an operating ratio of over 58 percent. This demonstrates that our team has excelled in strategy, safety and service, achieving overall operational excellence."

"It's a happy ending to 2024."

While vehicle shipments increased 5% year-over-year, operating income for the fourth quarter ended Dec. 31 was down 1% to $6.1 billion due to lower fuel surcharge revenue and an unfavorable business mix, partially offset by higher shipments and core price increases.

Intermodal traffic was up 16% in the quarter, but average revenue per vehicle was down 9% year-over-year.

International interconnectors rose 26 percent due to surging import demand, outpacing strong container traffic at West Coast ports.

As railroads draw more freight from trucks, the domestic intermodal business has grown.

Revenue truck loads rose 5 percent, with fertilizer up 3 percent and grain and chemicals up 8 percent.

Coal revenue continued its long decline, falling 29 percent in the quarter, but Union Pacific expects to partially offset that revenue in 2025 under a new contract with the Lower Colorado River Authority, a Texas power company.

Kenny Rocker, executive vice president of marketing and sales, said on a conference call that grains benefited from a bumper harvest and strong export business to Mexico, while plastics demand also grew. "Demand for construction materials, sand and rocks has weakened. We are closely monitoring potential tariff changes that could impact sales volumes. We expect a weaker economic environment in 2025."

The $1.5 billion project development currently underway is expected to drive freight volume growth. The Gulf Coast is a specific target in the region.

The operating ratio was 58.7 percent, an improvement of 220 basis points, including the adverse impact of 70 basis points from the approval of a new union contract.

Operating income rose 5 percent to a record $2.5 billion.

"There are a lot of unknowns in 2025 - tariffs, regulatory changes, interest rates - but that's been the case in the 40-plus years I've been in the railroad business. That's just the truth, "said Wiener, who began his career as a train attendant. "Having a 'buffer' in railcars, locomotives and operating capacity pays off. We expect growth in 2025 to be in the high single to low double digits."