Team UP, we are making progress to be the best at Safety, Service and Operational Excellence. We closed the third quarter with clearly identified areas we have to improve. We are working to improve safety. We are also moving faster, being more efficient, productive and responsive to our customers and all stakeholders. September alone had some of the best service performance metrics we’ve seen in a while.
Note: In this letter to employees, Jim recaps Union Pacific's third quarter performance and financial results.
I won’t sugarcoat our financials. Things cost more to make and to move, and people are buying less of them. Compared to this time last year, our revenue is down, and inflation is driving costs up. Our operating income is down by 17%, our operating revenue is down by 10% and business volumes are down by 3%. These results reflect a railroad that needs to use its resources more efficiently, an economy of rising prices, lower demand for some of what our customers are moving and higher inflation. The following provides highlights of our initiatives:
- We are working to be the best at safety and ensure everyone goes home safe. Safety is a mindset, not just a number. While I am happy to see our year-to-date personal injury rate improved and our number of derailments are down – we need to do even more. We are resetting our safety strategy, doing more safety training, focusing on culture, and refreshing how teams communicate and look out for each other.
- We are faster, delivering the service we sold our customers. Our quarterly freight car velocity is up by 5%, and over the last several weeks our cars have traveled an average of 210 miles per day. Trip plan compliance for our intermodal customers is up 13 points, and for manifest and auto, up 6 points year over year.
- We are more efficient and productive. Locomotive productivity improved 4% compared to last year, and we continue to find ways to use our fleet more efficiently. In the third quarter, our high horsepower fleet size and quarterly locomotive productivity numbers were better than they’ve been in over a year. Being more efficient and productive means making better decisions about costs and time, thinking, and acting like “it’s your money and resources” we are spending.
- We are delivering value safely, with speed. Teams are making changes to simplify the way we work, empower the people closest to the work and drive better decision making. Leaders are aligning work with current volumes, reducing layers and increasing spans of control, all with the goal of delivering greater value for our customers.
- We are engaging our teams and stakeholders. We are focused on changing our culture, treating our people and stakeholders with the dignity and respect everyone should expect from the largest and best railroad in North America. Thank you for helping us reach the highest number of participants in our Employee Engagement Survey – 89%, up another point from last year. We are reading your feedback to understand how we can continue improving – one highlight is seeing an increase in overall employee pride. As we improve our internal culture, we are also focused on our relationships with customers, being responsive to our regulators, and supportive of our communities. We just announced $5.1 million in grants for nonprofits serving people in need across the 23 states in our network.
As we close the third quarter – and my first one as CEO – I am excited. I love and appreciate the work you are doing. I’ve traveled the network and continued speaking with more customers, regulators and labor leaders. I also continue to meet many talented and capable employees who are very proud to be a part of Union Pacific.
I know our work is hard, and we are all working to be the best railroad in every way. We will be challenged, and we will face challenges, but delivering on our strategy of Safety, Service and Operational Excellence will open opportunities and prepare us for any obstacles thrown our way. Thank you for the pride you have in all you do and for keeping up the great work.
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