Union Pacific Corporation
Loading chart...
GENERAL
Union Pacific Railroad Company is the principal operating company of Union Pacific Corporation. One of America's most recognized companies, Union Pacific Railroad Company connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. The Railroad’s diversified business mix includes Bulk, Industrial, and Premium. Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to Eastern gateways, connects with Canada's rail systems, and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to customers by delivering products in a safe, reliable, fuel-efficient, and environmentally responsible manner.
Union Pacific Corporation was incorporated in Utah in 1969 and maintains its principal executive offices at 1400 Douglas Street, Omaha, NE 68179. The telephone number at that address is (402) 544-5000. The common stock of Union Pacific Corporation is listed on the New York Stock Exchange (NYSE) under the symbol “UNP”.
For purposes of this report, unless the context otherwise requires, all references herein to "Union Pacific", “UPC”, “Corporation”, “Company”, “we”, “us”, and “our” shall mean Union Pacific Corporation and its subsidiaries, including Union Pacific Railroad Company, which we separately refer to as “UPRR” or the “Railroad”.
STRATEGY
Safety, Service, and Operational Excellence supports the Company's long-term initiative to Grow its freight volumes. Together as a team, the Company will focus on achieving the best safety record in the industry, being known for superior service, grounded in operational excellence, which, in turn, drives growth.
Safety is paramount and, as our first area of focus, sets the foundation for achieving the Company's objectives. The mindset and culture are built around a personal commitment by all employees to prioritize safety so everyone goes home safely.
Service is all about delivering what we sold our customers. We work with our customers to understand the service they need to win in their markets and then drive how we win together. We commit to these service levels and do it with excellence.
Operational Excellence is about operating efficiently and productively. We will drive value with our available resources but also maintain a buffer so our service is resilient, managing the inevitable ups and downs that come with weather, fluctuating volumes, and securing growth.
Growth is the outcome of executing our strategy to be the industry leader in both safety and service resulting in improved margins and greater cash generation, creating long term enterprise value. The expected outcome of successfully executing our strategy will be an industry leading operating ratio and return on invested capital.
As we work to transform our railroad, our core values continue to guide us. Our passion for performance will help us win; our high ethical standards ensure we win in a way that supports all of our stakeholders; and our teamwork ensures we win together.
OPERATIONS
The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide and analyze revenues by commodity group, we treat the financial results of the Railroad as one segment due to the integrated nature of our rail network. Additional information regarding our business and operations, including revenues, financial information and data, and other information regarding environmental matters, is presented in Risk Factors, Item 1A; Legal Proceedings, Item 3; Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7; and the Financial Statements and Supplementary Data, Item 8.
5
Operations – UPRR is a Class I railroad operating in the U.S. We have 32,889 route miles, connecting Pacific Coast and Gulf Coast ports with the Midwest and Eastern U.S. gateways and providing several corridors to key Mexican and Canadian gateways. We serve the western two-thirds of the country and maintain coordinated schedules with other rail carriers to move freight to and from the Atlantic Coast, the Pacific Coast, the Southeast, the Southwest, Canada, and Mexico. Export and import traffic moves through Gulf Coast, Pacific Coast, and East Coast ports and across the Mexican and Canadian borders. In 2025, we generated freight revenues totaling $23.2 billion from the following three commodity groups:
2025 Freight Revenues
Bulk – The Company's Bulk shipments consist of grain and grain products, fertilizer, food and refrigerated, and coal and renewables. In 2025, this group generated 33% of our freight revenues. We access most major grain markets, connecting the Midwest and Western U.S. producing areas to export terminals in the Pacific Northwest and Gulf Coast ports as well as Mexico. We also serve significant domestic markets, including grain processors, animal feeders, ethanol, and renewable biofuel producers in the Midwest and West. Fertilizer movements originate in the Gulf Coast region, Midwest, Western U.S., and Canada (through interline access) for delivery to major agricultural users in those areas as well as abroad. The Railroad’s network supports the transportation of coal shipments to independent and regulated power companies and industrial facilities throughout the U.S. Through interchange gateways and ports, UPRR’s reach extends to Eastern U.S. utilities as well as to Mexico and other international destinations. Coal traffic originating in the Powder River Basin (PRB) area of Wyoming is the largest portion of the Railroad’s coal business.
Industrial – Our extensive network facilitates the movement of numerous commodities between thousands of origin and destination points throughout North America. The Industrial group consists of several categories, including construction, industrial chemicals, plastics, forest products, specialized products (primarily waste, salt, and roofing), metals and ores, petroleum, liquid petroleum gases (LPG), soda ash, and sand. Transportation of these products accounted for 37% of our freight revenues in 2025. Commercial, residential, and governmental infrastructure investments drive shipments of steel, aggregates, cement, and wood products. Industrial and light manufacturing plants receive steel, nonferrous materials, minerals, and other raw materials.
The industrial chemicals market consists of a vast number of chemical compounds that support the manufacturing of more complex chemicals. Plastics shipments support automotive, housing, and the durable and disposable consumer goods markets. Forest product shipments include lumber and paper commodities. Lumber shipments originate primarily in the Pacific Northwest or Western Canada and move throughout the U.S. for use in new home construction and repairs and remodeling. Paper shipments primarily support packaging needs. Oil and gas drilling generates demand for raw steel, finished pipe, stone, and drilling fluid commodities. The Company’s petroleum and LPG shipments are primarily impacted by refinery utilization rates, regional crude pricing differentials, pipeline capacity, and the use of asphalt for road programs. Soda ash originates in southwestern Wyoming and California, destined for chemical and glass producing markets in North America and abroad.
Premium – In 2025, Premium shipments generated 30% of Union Pacific’s total freight revenues. Premium includes finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and international. International business consists of import and export traffic moving in 20 or 40-foot shipping containers, that mainly pass through West Coast ports, destined for one of the Company's many inland intermodal terminals. Domestic business includes container and trailer traffic picked up and delivered within North America for intermodal marketing companies (primarily shipper agents and logistics companies) as well as truckload carriers.
We are the largest automotive carrier west of the Mississippi River and operate or access more than 40 vehicle distribution centers. The Railroad’s extensive franchise accesses six vehicle assembly plants and connects to West Coast ports, all six major Mexico gateways, and the Port of Houston to accommodate both import and export shipments. In addition to transporting finished vehicles, the Company provides expedited handling of automotive parts in both boxcars and intermodal containers destined for Mexico, the U.S., and Canada.
6
Seasonality – Some of the commodities we carry have peak shipping seasons, reflecting either or both the nature of the commodity (such as certain agricultural and food products that have specific growing and harvesting seasons) and the demand cycle for the commodity (such as intermodal traffic that generally peaks during the third quarter to meet back-to-school and holiday-related demand for consumer goods during the fourth quarter). The peak shipping seasons for these commodities can vary considerably each year depending upon various factors, including the strength of domestic and international economies and currencies; consumer demand; the strength of harvests, which can be adversely affected by severe weather; market prices for agricultural products; and supply chain disruptions.
Proud & engaged workforce – Our employees are central to our strategy of Safety, Service, and Operational Excellence leading to Growth, and investing in our workforce is key to our success.
Our people: Our award-winning, multigenerational workforce includes talented people from all walks of life, in many stages of life. Made up of management and craft professionals, we are focused on attracting, retaining, and developing talent across our entire system. We employed an average of 29,287 employees during 2025.
Union Pacific works with 13 major rail unions, representing approximately 83% of our workforce. Pursuant to the Railway Labor Act (RLA), a federal statute enacted in 1926, our collective bargaining agreements are subject to modification every five years. Existing agreements remain in effect until new agreements are ratified or until the RLA procedures are exhausted. The RLA is designed to bring the railroads and unions to agreement without disruptions to rail transportation. We have concluded the majority of our local negotiations, which began on January 1, 2025, related to years 2025-2029. There are two negotiations ongoing at one of our subsidiaries.
Our culture: At Union Pacific, The How Matters – high ethical standards guide the decisions we make and action we take to protect our employees, communities, and customers. Our passion for performance drives our safety, customer experience, and financial results while we work as a team to create opportunity for all.
Safety is central to everything we do at Union Pacific. Together, we are committed to cultivating a safety-focused culture, so our employees return home safely every day. To achieve this, our employees identify risks, initiate action to mitigate those risks, and have the courage to care to keep each other safe.
Our success is measured by our personal injury rate (the number of reportable injuries for every 200,000 employee-hours worked) and our derailment incident rate (the number of reportable derailment incidents per million train miles). Reportable personal injuries are defined as on duty incidents or occupational illnesses that result in employees losing time away from work, modifying or restricting their normal duties, or receiving any medical treatment above and beyond first aid. Reportable derailment incidents are defined as any occurrence where a wheel of a locomotive or rail car falls off the track and causes damage to track, equipment, or structures above the Federal Railroad Administration (FRA) reporting threshold, regardless of ownership ($12,400 for 2025 and $12,600 for 2026). Personal injuries and derailment incidents that meet reportable criteria are reported to the FRA.
Our 2025 personal injury rate of 0.68 improved 24%, and our derailment incident rate of 1.75 improved 19% versus 2024. (See further discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7, of this report.)
Union Pacific is committed to creating an environment where people can be their best, personally and professionally. We believe that a supportive culture increases employee engagement, improves morale, and allows qualified employees to succeed and contribute to Union Pacific's success. All of this supports our safety strategy and improves the quality of decision-making, problem-solving, and strategic thinking.
The employee journey: From recruitment to retirement and milestones in between, we are relentlessly focused on supporting and engaging employees throughout their Union Pacific journey. We view it as imperative to invest in our employees with meaningful benefit offerings, developmental experiences, and career opportunities.
The process begins with recruitment, where we strive to attract the most talented employees to join our team. Then, we focus on training and development, which includes courses and programs designed to help our employees grow into new roles and/or learn a new skill in their current role so that we can retain our workforce over time.
Providing competitive compensation and meaningful benefits is key to attracting and retaining talented employees. Union Pacific is committed to continuously reviewing its compensation programs and comprehensive benefits programs to promote programs that are fair and competitive. Both are key to enhancing the value of working for Union Pacific and demonstrating the Company’s commitment to the health and wealth of employees during their career. Benefits vary based on the applicable collective bargaining agreement or an employee’s management status. The final stage of the employee journey is a fulfilling retirement, which is enabled during their Union Pacific career through our compensation and benefit programs, particularly contributions to 401(k) plans and the employee stock purchase plan (ESPP).
7
Our Board of Directors evaluates our non-union compensation plans and reviews recommendations from the Compensation and Talent Committee, while collective bargaining agreements govern compensation for our union employees. The median annual compensation for all employees employed as of December 31, 2025, was $107,889 (excluding the CEO).
Talent is critical - our ability to recruit and retain employees is directly tied to our railroad’s success, as proven by our 2025 retention rate of 89%, our robust benefit offerings, and work environment that creates meaningful family-supporting careers. We are focused on effectively managing workforce levels to the demands of the business and improving quality of life for our employees.
Railroad security – Our security efforts consist of a wide variety of measures, including employee training, engagement with our customers, training of emergency responders, and partnerships with numerous federal, state, and local government agencies. While federal law requires us to protect the confidentiality of our security plans designed to safeguard against terrorism and other security incidents, the following provides a general overview of our security initiatives.
UPRR security measures – We maintain a comprehensive security plan designed to both deter and respond to any potential or actual threats as they arise. The plan includes four levels of alert status, each with its own set of countermeasures. We employ our own police force, consisting of commissioned and highly-trained officers. The police are certified state law enforcement officers with investigative and arrest powers. The Union Pacific Police Department has achieved accreditation under the Commission on Accreditation for Law Enforcement Agencies, Inc. (CALEA) for complying with the highest law enforcement standards. Our employees undergo recurrent security and preparedness training as well as federally mandated hazardous materials and security training. We regularly review the sufficiency of our employee training programs. We maintain the capability to move critical operations to back-up facilities in different locations.
We operate an emergency response management center 24 hours a day. The center receives reports of emergencies, dangerous or potentially dangerous conditions, and other safety and security issues from our employees, the public, law enforcement, and other government officials. In cooperation with government officials, we monitor both threats and public events, and, as necessary, we may alter rail traffic flow at times of concern to minimize risk to communities and our operations. We comply with the hazardous materials routing rules and other requirements imposed by federal law. We design our operating plan to expedite the movement of Rail Security Sensitive Materials (RSSM), a subset of particularly hazardous materials, to minimize the time rail cars remain idle at yards and terminals located in or near major population centers. Additionally, in compliance with Transportation Security Administration (TSA) regulations, we deployed information systems and instructed employees in tracking and documenting the handoff of RSSM with customers and interchange partners.
Loading financial statements...
Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals.
| Line item |
|---|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
RESULTS OF OPERATIONS
Three months ended March 31, 2026, compared to
three months ended March 31, 2025
For purposes of this report, unless the context otherwise requires, all references herein to "Union Pacific", “UPC”, “Corporation”, “Company”, “we”, “us”, and “our” shall mean Union Pacific Corporation and its subsidiaries, including Union Pacific Railroad Company, which we separately refer to as “UPRR” or the “Railroad”.
The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and applicable notes to the Condensed Consolidated Financial Statements, Item 1, and other information included in this report. Our Condensed Consolidated Financial Statements are unaudited and reflect all adjustments (consisting only of normal and recurring adjustments) that are, in the opinion of management, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (GAAP).
The Railroad, along with its subsidiaries and rail affiliates, is our one reportable business segment. Although revenues are analyzed by commodity, we analyze the net financial results of the Railroad as one segment due to the integrated nature of the rail network.
Critical accounting estimates
The preparation of these financial statements requires estimation and judgment that affect the reported amounts of revenues, expenses, assets, and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. If these estimates differ materially from actual results, the impact on the Condensed Consolidated Financial Statements may be material. Our critical accounting estimates are available in Item 7 of our 2025 Annual Report on Form 10-K. During the first three months of 2026, there have not been any significant changes with respect to our critical accounting estimates.
RESULTS OF OPERATIONS
Quarterly summary
The Company reported earnings of $2.87 per diluted share on net income of $1.7 billion and an operating ratio of 60.5% in the first quarter of 2026 compared to earnings of $2.70 per diluted share on net income of $1.6 billion and an operating ratio of 60.7% in the first quarter of 2025. Freight revenues increased 4% in the first quarter of 2026 compared to the same period in 2025 as core pricing gains, higher fuel surcharge revenues, and business mix more than offset a 1% reduction in volume. Higher carloads in domestic intermodal, coal, grain, and industrial chemicals and plastics were more than offset by lower international intermodal carloads, which declined 28% in the first quarter of 2026, and fewer automotive shipments.
Building on solid performance levels throughout 2025, our rail network remained fluid, while improving service levels and operational execution, to achieve best-ever first quarter key operating metric results. Freight car velocity increased 9% and terminal dwell improved 11%. We efficiently aligned operational resources to meet changing customer demands to more bulk and manifest carloads, while increasing train length 3%, despite lower intermodal carloads. Workforce productivity improved 7% and locomotive productivity improved 6% as we optimized network resources while improving both service performance index measures.
Operating expenses increased 3% compared to the first quarter of 2025 due to inflation, higher fuel prices, acquisition-related expenses (see Note 17 to the Condensed Consolidated Financial Statements, Item 1), and higher depreciation, partially offset by productivity. Operating income increased 4% to $2.5 billion, and the operating ratio of 60.5% improved 0.2 points, reflecting top-line growth and productivity gains compared to the first quarter of 2025.
19
Operating revenues | ||||||||||||||||||||||
| Millions, for the three months ended March 31, | 2026 | 2025 | Change | |||||||||||||||||||
| Freight revenues | $ | 5,893 | $ | 5,691 | 4% | |||||||||||||||||
| Other subsidiary revenues | 175 | 194 | (10) | |||||||||||||||||||
| Accessorial revenues | 126 | 118 | 7 | |||||||||||||||||||
| Other | 23 | 24 | (4) | |||||||||||||||||||
| Total | $ | 6,217 | $ | 6,027 | 3% | |||||||||||||||||
We generate freight revenues by transporting products from our three commodity groups. Freight revenues vary with volume (carloads) and average revenue per car (ARC). Changes in price, traffic mix, and fuel surcharges drive ARC. Customer incentives, which are primarily provided for shipping to/from specific locations or based on cumulative volume, are recorded as a reduction to operating revenues. Customer incentives that include variable consideration based on cumulative volume are estimated using the expected value method, which is based on available historical, current, and forecasted volume, and recognized as the related performance obligation is satisfied. We recognize freight revenues over time as shipments move from origin to destination. The allocation of revenues between reporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred.
Other subsidiary revenues (primarily logistics operations) are generally recognized over time as shipments move from origin to destination. The allocation of revenues between reporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred. Accessorial revenues are recognized at a point in time as performance obligations are satisfied.
Freight revenues increased 4% on 1% lower carloads in the first quarter of 2026 compared to the same period in 2025 driven by core pricing gains, higher fuel surcharge revenue, and a more favorable business mix (decreases in shipments with lower ARC, such as international intermodal). Higher carloads in domestic intermodal, coal, grain, and industrial chemicals and plastics shipments were more than offset by lower international intermodal carloads and automotive shipments.
Each of our commodity groups includes revenues from fuel surcharges. Freight revenues from fuel surcharge programs increased to $608 million in the first quarter of 2026 compared to $565 million in the same period of 2025 due to higher fuel prices, which were partially offset by the fuel price lag impact (it generally takes up to two months for changing fuel prices to affect fuel surcharge recoveries) and lower volumes.
Other subsidiary revenues decreased in the first quarter of 2026 compared to 2025 primarily driven by the transfer of commuter operations to Metra, lower demand for auto part shipments at our subsidiary that brokers intermodal and transload logistics services, and the sale of a portion of revenue-generating assets in late 2025 from our technology subsidiary. Accessorial revenues increased in the first quarter 2026 compared to 2025 driven by increased storage and intermodal accessorial revenues.
20
The following tables summarize the year-over-year changes in freight revenues, revenue carloads, and ARC by commodity type:
| Freight revenues | ||||||||||||||||||||||
| Millions, for the three months ended March 31, | 2026 | 2025 | Change | |||||||||||||||||||
| Grain & grain products | $ | 1,057 | $ | 950 | 11% | |||||||||||||||||
| Fertilizer | 236 | 210 | 12 | |||||||||||||||||||
| Food & refrigerated | 247 | 260 | (5) | |||||||||||||||||||
| Coal & renewables | 486 | 416 | 17 | |||||||||||||||||||
| Bulk | 2,026 | 1,836 | 10 | |||||||||||||||||||
| Industrial chemicals & plastics | 655 | 607 | 8 | |||||||||||||||||||
| Metals & minerals | 555 | 521 | 7 | |||||||||||||||||||
| Forest products | 318 | 321 | (1) | |||||||||||||||||||
| Energy & specialized markets | 663 | 633 | 5 | |||||||||||||||||||
| Industrial | 2,191 | 2,082 | 5 | |||||||||||||||||||
| Automotive | 560 | 581 | (4) | |||||||||||||||||||
| Intermodal | 1,116 | 1,192 | (6) | |||||||||||||||||||
| Premium | 1,676 | 1,773 | (5) | |||||||||||||||||||
| Total | $ | 5,893 | $ | 5,691 | 4% | |||||||||||||||||
| Revenue carloads | ||||||||||||||||||||||
| Thousands, for the three months ended March 31, | 2026 | 2025 | Change | |||||||||||||||||||
| Grain & grain products | 243 | 214 | 14% | |||||||||||||||||||
| Fertilizer | 52 | 49 | 6 | |||||||||||||||||||
| Food & refrigerated | 39 | 43 | (9) | |||||||||||||||||||
| Coal & renewables | 214 | 185 | 16 | |||||||||||||||||||
| Bulk | 548 | 491 | 12 | |||||||||||||||||||
| Industrial chemicals & plastics | 181 | 169 | 7 | |||||||||||||||||||
| Metals & minerals | 183 | 174 | 5 | |||||||||||||||||||
| Forest products | 49 | 51 | (4) | |||||||||||||||||||
| Energy & specialized markets | 147 | 143 | 3 | |||||||||||||||||||
| Industrial | 560 | 537 | 4 | |||||||||||||||||||
| Automotive | 183 | 195 | (6) | |||||||||||||||||||
| Intermodal [a] | 792 | 874 | (9) | |||||||||||||||||||
| Premium | 975 | 1,069 | (9) | |||||||||||||||||||
| Total | 2,083 | 2,097 | (1)% | |||||||||||||||||||
| Average revenue per car | ||||||||||||||||||||||
| For the three months ended March 31, | 2026 | 2025 | Change | |||||||||||||||||||
| Grain & grain products | $ | 4,345 | $ | 4,434 | (2)% | |||||||||||||||||
| Fertilizer | 4,564 | 4,339 | 5 | |||||||||||||||||||
| Food & refrigerated | 6,414 | 6,058 | 6 | |||||||||||||||||||
| Coal & renewables | 2,270 | 2,250 | 1 | |||||||||||||||||||
| Bulk | 3,700 | 3,744 | (1) | |||||||||||||||||||
| Industrial chemicals & plastics | 3,620 | 3,601 | 1 | |||||||||||||||||||
| Metals & minerals | 3,028 | 2,986 | 1 | |||||||||||||||||||
| Forest products | 6,505 | 6,264 | 4 | |||||||||||||||||||
| Energy & specialized markets | 4,505 | 4,433 | 2 | |||||||||||||||||||
| Industrial | 3,911 | 3,877 | 1 | |||||||||||||||||||
| Automotive | 3,058 | 2,971 | 3 | |||||||||||||||||||
| Intermodal [a] | 1,408 | 1,364 | 3 | |||||||||||||||||||
| Premium | 1,718 | 1,658 | 4 | |||||||||||||||||||
| Average | $ | 2,829 | $ | 2,714 | 4% | |||||||||||||||||
[a]For intermodal shipments each container or trailer equals one carload.
21
Bulk – Bulk includes shipments of grain and grain products, fertilizer, food and refrigerated, and coal and renewables. Freight revenues from bulk shipments increased 10% in the first quarter of 2026 compared to 2025 due to 12% volume growth, core pricing gains, and higher fuel surcharge revenues, partially offset by business mix (from increased coal shipments). Bulk carload growth was driven by increased coal shipments from continued higher coal usage in electricity generation due to elevated natural gas prices combined with business wins, and also driven by increased export grain shipments, partially offset by lower food and refrigerated carloads.
Industrial – Industrial includes shipments of industrial chemicals and plastics, metals and minerals, forest products, and energy and specialized markets. Freight revenues from industrial shipments increased 5% in the first quarter of 2026 compared to 2025 due to increased volumes, core pricing gains, and higher fuel surcharge revenues, partially offset by business mix (from higher rock shipments and lower lumber shipments). The 4% quarterly carload improvement was driven by increased demand for industrial chemicals and plastics and construction materials coupled with business development efforts, which more than offset reduced shipments from continued weak lumber demand.
Premium – Premium includes shipments of finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and international. Premium freight revenues decreased 5% in the first quarter of 2026 compared to 2025 driven by 9% lower volumes, which were partially offset by higher fuel surcharge revenues, core pricing gains, and business mix (from reduced international intermodal shipments). First quarter of 2026 intermodal volumes were down 9% driven by a 28% reduction in international intermodal carloads as a result of elevated U.S. West Coast imports in the first quarter of 2025 that did not recur, partially offset by continued strong domestic intermodal growth. Automotive shipments decreased 6% in the first quarter of 2026 compared to 2025 due to lower production as a result of weaker finished vehicle demand.
Mexico business – Freight revenues from each of our commodity groups includes revenues from shipments to and from Mexico, which increased 1% to $729 million in the first quarter of 2026 compared to 2025 driven by 3% volume growth due to increased intermodal, partially offset by lower beverage, steel, and automotive shipments.
Operating expenses | ||||||||||||||||||||||
| Millions, for the three months ended March 31, | 2026 | 2025 | Change | |||||||||||||||||||
| Compensation and benefits | 1,227 | 1,212 | 1% | |||||||||||||||||||
| Purchased services and materials | 673 | 631 | 7 | |||||||||||||||||||
| Fuel | 643 | 603 | 7 | |||||||||||||||||||
| Depreciation | 633 | 610 | 4 | |||||||||||||||||||
| Equipment and other rents | 219 | 241 | (9) | |||||||||||||||||||
| Other | 364 | 359 | 1 | |||||||||||||||||||
| Total | $ | 3,759 | $ | 3,656 | 3% | |||||||||||||||||
Operating expenses increased 3% compared to the first quarter of 2025 due to inflation, higher fuel prices, acquisition-related expenses (see Note 17 to the Condensed Consolidated Financial Statements, Item 1), and higher depreciation expense. These increases were partially offset by productivity.
Compensation and benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, and incentive costs. For the first quarter of 2026, compensation and benefits expense increased 1% compared to 2025 due to wage inflation and higher incentive compensation costs, which was partially offset by lower employee levels.
Purchased services and materials – Expense for purchased services and materials includes the costs of services purchased from outside contractors and other service providers (including equipment maintenance and contract expense incurred by our subsidiaries for external transportation services); materials used to maintain the Railroad’s lines, structures, and equipment; costs of operating facilities jointly used by UPRR and other railroads; transportation and lodging for train crew employees; trucking and contracting costs for intermodal containers; leased automobile maintenance expense; and tools and supplies. Purchased services and materials increased 7% in the first quarter of 2026 compared to 2025 driven by acquisition-related expenses and inflation offset by lower costs associated with improved locomotive productivity.
Depreciation – The majority of depreciation expense relates to road property, including rail, ties, ballast, and other track material. Depreciation expense increased 4% for the first quarter of 2026 compared to 2025 driven by a higher depreciable asset base.
22
Fuel – Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Fuel expense increased in the first quarter of 2026 compared to the same period in 2025 driven by an increase in locomotive diesel fuel prices and gross ton-miles, partially offset by 4% improvement in the fuel consumption rate (computed as gallons of fuel consumed divided by gross ton-miles in thousands). Locomotive diesel fuel prices averaged $2.69 and $2.51 per gallon (including taxes and transportation costs) in the first quarter of 2026 and 2025, respectively.
Equipment and other rents – Equipment and other rents expense primarily includes rental expense that the Railroad pays for freight cars owned by other railroads or private companies; freight car, intermodal, and locomotive leases; and office and other rent expense, offset by equity income from certain equity method investments. Equipment and other rents expense decreased 9% in the first quarter of 2026 driven by lower car hire expense attributable to improved cycle times and lower operating equipment lease expense, partially offset by lower equity income.
Other – Other expense includes state and local taxes; freight, equipment, and property damage; utilities; insurance; personal injury; environmental remediation; employee travel; telephone and cellular; computer software; bad debt; and other general expenses. Other expense increased 1% in the first quarter of 2026 compared to 2025 driven by higher equipment and property damage costs, property taxes, and bad debt expense. These increases are partially offset by lower personal injury costs.
Non operating items | ||||||||||||||||||||||
| Millions, for the three months ended March 31, | 2026 | 2025 | Change | |||||||||||||||||||
| Other income, net | $ | 91 | $ | 78 | 17% | |||||||||||||||||
| Interest expense | (320) | (322) | (1) | |||||||||||||||||||
| Income tax expense | (528) | (501) | 5 | |||||||||||||||||||
Other income, net – Other income increased in the first quarter of 2026 compared to 2025 driven by higher real estate income. See Note 6 to the Condensed Consolidated Financial Statements, Item 1, for additional detail.
Interest expense – Interest expense decreased slightly in the first quarter of 2026 compared to 2025 as a result of lower weighted-average debt levels. The effective interest rate was 4.1% for both periods. The weighted-average debt levels were $31.4 billion and $31.9 billion for first quarter of 2026 and 2025, respectively.
Income tax expense – Income tax expense increased 5% in the first quarter of 2026 compared to 2025 due to higher pre-tax income. Our effective tax rates were 23.7% and 23.6% for the first quarter of 2026 and 2025, respectively.
23
OTHER OPERATING/PERFORMANCE AND FINANCIAL STATISTICS
We report a number of key performance measures weekly to the STB. We provide these on our website at https://investor.unionpacific.com/key-performance-metrics.
Operating/performance statistics
Management continuously monitors these key operating metrics to evaluate our operational efficiency in striving to deliver the service product we sold to our customers.
Railroad performance measures are included in the table below:
| For the three months ended March 31, | 2026 | 2025 | Change | |||||||||||||||||||
| Gross ton-miles (GTMs) (billions) | 220.6 | 212.8 | 4% | |||||||||||||||||||
| Revenue ton-miles (billions) | 111.5 | 104.0 | 7 | |||||||||||||||||||
| Freight car velocity (daily miles per car) | 235 | 215 | 9 | |||||||||||||||||||
| Average train speed (miles per hour) [a] | 25.5 | 23.7 | 8 | |||||||||||||||||||
| Average terminal dwell time (hours) [a] | 19.7 | 22.1 | (11) | |||||||||||||||||||
| Locomotive productivity (GTMs per horsepower day) | 144 | 136 | 6 | |||||||||||||||||||
| Train length (feet) | 9,746 | 9,490 | 3 | |||||||||||||||||||
| Intermodal service performance index (%) | 98 | 94 | 4 pts | |||||||||||||||||||
| Manifest service performance index (%) | 98 | 93 | 5 pts | |||||||||||||||||||
| Workforce productivity (car miles per employee) | 1,163 | 1,091 | 7 | |||||||||||||||||||
| Total employees (average) | 28,647 | 30,146 | (5) | |||||||||||||||||||
| Operating ratio (%) | 60.5 | 60.7 | (0.2) pts | |||||||||||||||||||
[a]As reported to the STB.
Gross and revenue ton-miles – Gross ton-miles are calculated by multiplying the weight of loaded and empty freight cars by the number of miles hauled. Revenue ton-miles are calculated by multiplying the weight of freight by the number of rate miles. Gross ton-miles and revenue ton-miles increased 4% and 7%, respectively, in the first quarter of 2026 compared to 2025, while corresponding carloads decreased 1%. Changes in business mix drove the variances between gross ton-miles, revenue ton-miles, and carloads due to higher coal and grain shipments that are generally heavier and decreased intermodal shipments that are generally lighter.
Freight car velocity – Freight car velocity measures the average daily miles per car on our network. The two key drivers of this metric are the speed of the train between terminals (average train speed) and the time a rail car spends at the terminals (average terminal dwell time). Freight car velocity increased 9% in the first quarter of 2026 compared to 2025 driven by an 11% decrease in terminal dwell and an 8% improvement in train speed.
Locomotive productivity – Locomotive productivity is gross ton-miles per average daily locomotive horsepower available. Locomotive productivity increased 6% in the first quarter of 2026, driven by improved network fluidity and asset utilization as the average active fleet decreased 4% even as gross ton-miles increased.
Train length – Train length is the average maximum train length on a route measured in feet. Even with lower international intermodal volumes, train length increased 3% in the first quarter of 2026 compared to 2025 due to train length improvement initiatives, specifically driven by proprietary technology and mainline capacity investments.
Service performance index (SPI) – SPI is a ratio of the service customers are currently receiving relative to the best monthly performance over the last three years. Measuring our performance relative to a historical benchmark demonstrates our focus on continuously improving service for our customers. Our SPI is calculated for intermodal and manifest products. Intermodal SPI improved 4 points in the first quarter of 2026 compared to 2025. Manifest SPI improved 5 points in the first quarter of 2026 compared to 2025. The improvements in SPI are driven by the continued network fluidity as we adjusted to changing customer demand for higher grain shipments, reduced intermodal shipments, and continued strong coal carloads.
Workforce productivity – Workforce productivity is average daily car miles per employee. Workforce productivity improved 7% in the first quarter of 2026 compared to 2025, as average daily car miles increased 1% while employee levels declined 5% compared to 2025. We continually align our active train, engine, and yard (TE&Y) workforce to meet customer demands in a dynamic economic environment, while maintaining operational fluidity. As a result, our active TE&Y decreased 4% during the first quarter of 2026 on a 1% reduction in carload levels compared to the same period in 2025.
24
Operating ratio – Operating ratio is our operating expenses reflected as a percentage of operating revenues. For the first quarter of 2026, our operating ratio of 60.5% improved 0.2 points driven by productivity initiatives and core pricing gains, partially offset by inflation and acquisition-related expenses.
| Debt / net income | ||||||||
| Millions, except ratios for the trailing twelve months ended [1] | Mar. 31, 2026 | Dec. 31, 2025 | ||||||
| Debt | $ | 30,651 | $ | 31,814 | ||||
| Net income | 7,213 | 7,138 | ||||||
| Debt / net income | 4.2 | 4.5 | ||||||
| Adjusted debt / adjusted EBITDA | ||||||||
| Millions, except ratios for the trailing twelve months ended [1] | Mar. 31, 2026 | Dec. 31, 2025 | ||||||
| Net income | $ | 7,213 | $ | 7,138 | ||||
| Add: | ||||||||
| Income tax expense | 2,055 | 2,028 | ||||||
| Depreciation | 2,488 | 2,465 | ||||||
| Interest expense | 1,307 | 1,309 | ||||||
| EBITDA | $ | 13,063 | $ | 12,940 | ||||
| Adjustments: | ||||||||
| Other income, net | (642) | (629) | ||||||
| Interest on operating lease liabilities [2] | 35 | 40 | ||||||
| Adjusted EBITDA (a) | $ | 12,456 | $ | 12,351 | ||||
| Debt | $ | 30,651 | $ | 31,814 | ||||
| Operating lease liabilities | 854 | 1,008 | ||||||
| Adjusted debt (b) | $ | 31,505 | $ | |||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-04-24 | Rocker Kenyatta G | EVP MARKETING & SALES | Sell | -27,387 ×2 | $271.76 | -$7,442,691 |
| 2026-04-24 | Hamann Jennifer L | EVP & CHIEF FINANCIAL OFFICER | Sell | -2,000 | $274.70 | -$549,400 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-07-23 10-Q expected by 2026-08-09 (in 83 days)
- ~2026-10-22 10-Q expected by 2026-11-08 (in 174 days)
- ~2027-02-05 10-K expected by 2027-03-16 (in 280 days)
- ~2027-04-22 10-Q expected by 2027-05-09 (in 356 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-04-23 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-23 10-Q Quarterly Report
- 2026-02-06 10-K Annual Report
- 2026-01-27 8-K Earnings Release; Financial Statements and Exhibits
- 2025-12-12 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-17 8-K Shareholder Vote Results; Other Events; Financial Statements and Exhibits
- 2025-11-06 8-K Other Events
- 2025-10-23 10-Q Quarterly Report
- 2025-10-23 8-K Earnings Release; Financial Statements and Exhibits
- 2025-09-30 S-4/A S-4/A
- 2025-09-16 S-4 Registration (Merger)
- 2025-07-29 8-K Material Agreement Entered; Financial Statements and Exhibits
- 2025-07-29 8-K Other Events; Financial Statements and Exhibits
- 2025-07-24 10-Q Quarterly Report
- 2025-07-24 8-K Earnings Release; Financial Statements and Exhibits