BNSF drove up income, drove down operating ratio in 1Q

Despite a significant drop in consumer products traffic due to heavy congestion at West Coast ports, BNSF Railway Co. ramped up income and ratcheted up revenue in the first quarter.

The Class I's net income soared 44 percent to $1 billion, operating income leaped 38 percent to $1.9 billion and total revenue rose 3 percent to $5.6 billion compared with first-quarter 2014 results, according to a financial performance summary posted on BNSF's website. In addition, volume increased 1 percent to 2.47 million units and the railroad's operating ratio improved a whopping 9.9 points to 65.5.

Agricultural products revenue climbed 19 percent to $1.17 billion and volume jumped 15 percent to 271,000 units primarily because of heightened demand for corn, increased milo exports and improved service, BNSF officials said in the summary. Coal revenue rose 4 percent to $1.27 million and volume grew 7 percent to 600,000 units, and industrial products revenue increased 2 percent to $1.44 billion and volume rose 3 percent to 467,000 units.

But consumer products revenue fell 10 percent to $1.5 billion and volume tumbled 6 percent to 1.1 million units as contentious labor negotiations at West Coast ports caused container congestion in the quarter, BNSF officials said.

The Class I also reported that 1Q operating expenses declined 9 percent year over year to $3.7 billion, with a significant portion of the decrease reflecting increased costs in first-quarter 2014 that were associated with severe weather issues and service-related challenges. Although fuel expenses fell 38 percent to $713 million, equipment rents dropped 11 percent to $191 million and purchased services dipped 1 percent to $648 million, compensation and benefits costs rose 10 percent to $1.3 billion primarily due to a higher average headcount and wage inflation, BNSF officials said.