BNSF's revenue rose, income and volume fell in Q3

In the third quarter, BNSF Railway Co.’s total revenue shot up 16% to nearly $7 billion, but its operating expenses ballooned 30% to $4.6 billion on a year-over-year basis.

Moreover, the Class I’s operating income fell 7% to $2.1 billion, net income declined 6% to $1.4 billion, operating ratio worsened 8.2 points to 67.7 and volume dipped 5% to 2.4 million units, according to a Q3 financial performance report.

Revenue gains were the sole good-news story, including average revenue per car/unit that climbed 23% to $2,623 primarily because of higher fuel surcharges driven by diesel price hikes.

By commodity group, volume in the quarter:
• fell 7% for consumer products mostly due to lower international intermodal shipments resulting from supply-chain challenges;
• rose 4% for agricultural products because of higher domestic grain shipments, and increased renewable diesel and oil feedstock traffic;
• declined 7% for industrial products since demand for crude-by-rail shipments was low and building products traffic fell; and
• dipped 1% for coal primarily because of network challenges.

In terms of operating costs, the rise in Q3 expenses reflect significant fuel price increases and higher compensation/benefit costs, BNSF officials said in the report. Fuel expenses skyrocketed 80% to $1.3 billion, compensation/benefit costs climbed 26% to $1.5 billion and materials and other expenses ballooned 94% to $331 million.

But there were no significant changes in purchased services, depreciation/amortization, equipment rents or interest expenses, BNSF officials said.