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Union Pacific Corp. reached a milestone in the second quarter — or more accurately, passed it. The Class I topped $4 billion in quarterly revenue for the first time.

Operating revenue totaled $4.05 billion, up 3 percent compared with second-quarter 2006. UP also set a quarterly record for commodity revenue at $3.9 billion, which rose 3 percent year over year.

The railroad posted revenue gains in chemicals (up 8 percent), agricultural products (7 percent), energy (4 percent) and intermodal (3 percent). Industrial products revenue dropped 1 percent and automotive revenue was flat. Total average revenue per car rose 7 percent.

UP also reported second-quarter operating income of $787 million, a 10 percent increase, and net income of $446 million, a 14 percent increase compared with second-quarter 2006. The Class I’s quarterly operating ratio improved 1.2 points to 80.5 and first-half ratio improved 1.8 points to 80.9.

“In the face of economic and weather challenges, we improved our operating efficiency, posting the best second-quarter operating ratio in four years,” said UP Chairman, President and Chief Executive Officer Jim Young in a prepared statement. “In addition, our customer satisfaction scores improved 11 points year over year.”

But it wasn’t an across-the-board banner quarter for UP. Second-quarter carloads decreased 3 percent to 2.4 million units primarily because of severe weather in the Midwest and soft housing and automotive markets.

In addition, total quarterly expenses rose 2 percent to $3.3 billion compared with second-quarter 2006 even though fuel costs decreased 4 percent to $766 million. Purchased services, depreciation and materials/supply costs rose 8 percent, 6 percent and 4 percent, respectively.

“Although the economic outlook remains uncertain, our continued focus on yield and productivity improvements should drive better service for our customers and strong financial results for our shareholders in the second half,” said Young.