Union Pacific Corporation has said its shipping volumes are up so far this year, but the railroad company expects a 7 per cent drop in first-quarter coal shipments due to unusually warm winter weather.
The company stood by its forecast for higher full-year profit amid a slowly mending economy. “Coal inventory levels are up and the burn rate is down,” Chief Financial Officer Rob Knight said on Tuesday at JPMorgan’s Aviation, Transportation and Defense conference. His comments were Webcast.
“What will change that glide path are summer conditions,” if utility customers need to use more coal to produce electricity to run air conditioners, he said.
For now, utility customers’ coal inventories are averaging 75-day stockpiles, he said, compared with an optimal level of about 60 days.
While Union Pacific’s coal volumes are headed lower, its chemicals shipments are expected to be up 9 to 10 per cent in the first quarter, Knight said. Overall shipping volumes are up 2 per cent so far this year, he said.
“We’ve also been able to run a very efficient operation, and got started on some capital work that in harsher winter conditions would have been harder,” he said.