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Union Pacific suffers as coal shipments plummet

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World Coal,

Significantly lower coal shipments have hit rail operator Union Pacific’s 2Q15 income. The company’s operating income totaled US$1.9 billion - down 11% on the same period last year.

“Solid core pricing gains were not enough to overcome a significant decrease in demand, said Union Pacific’s President and CEO, Lance Fritz. “Total volumes in the second quarter were down 6%, led by a sharp decline in coal.”

Coal revenues dropped 31% y/y in the quarter from US$989 million to US$679 million on revenue ton-miles of 31.3 billion – down from 45.5 billion last year. Meanwhile, year-to-date coal revenue is down 18% from US$1.95 billion to US$1.59 billion.

Union Pacific has been particularly hard hit by the drop in coal-fired generation in the US. The company’s main coal cargo is thermal coal from the Powder River Basin, while rivals CSX and Northern Suffolk carry more metallurgical coal.

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