Business Strategy and Outlook| Matthew Young, CFA |
While the stages have varied over the years, Class I railroad behemoth Union Pacific continues its long-running profitability improvement efforts. Since roughly 2018, all the rails have confronted the push to implement precision scheduled railroading if they hadn’t already. Shareholders have demanded it, motivated by PSR’s initial impressive impact at Canadian National and Canadian Pacific. UP is no exception, launching its own PSR efforts in late 2018. UP’s operating ratio (expenses/revenue) was in a better position than other railroads when its rollout started, but PSR has proved to be the surest path to greater network efficiency and higher incremental margins.