BNSF attributed the lower operating ratios in 2020 to lower volume-related costs, productivity improvements, the effects of cost control initiatives and improved weather conditions.BNSF's second-quarter net earnings were $1.13 billion, compared with $1.34 billion in the second quarter of 2019.Of that, revenues totaled $4.6 billion, compared with nearly $5.9 billion for the same period in 2019. But on an annual basis, consumer products revenue slipped only 0.5% to $7.9 billion amid higher average revenue per car/unit and volume decreases of 4.6%.
However, the COVID-19 pandemic has caused a significant economic slowdown that has adversely affected the demand for transportation services," Berkshire Hathaway, which owns BNSF, said in a statement. Volumes and Revenues Operating income for the fourth quarter and full year 2019 was $2.1 billion and $8.1 billion, respectively, an increase of $44 million (2%) and $271 million (3%), respectively, compared to the same periods in 2018. In 2019, the Canadian rail company reported an operating ratio of 62.5 percent. Revenues declined across all of BNSF's segments. “Overall softness” in the industrial sector, lower frac sand volumes and adverse weather conditions contributed to a 3% decrease in volumes.
But as operating ratios—operating expenses as a percentage of operating revenue—flirt with a sub-60%, the meaning for the longer term is unclear.
Operating ratios were 61.1% and 63.3% for the second quarter and first six months, respectively, improvements of 3.7% and 3.1% compared to the same periods in 2019. Annual carloads fell by 4.5% to 10.2 million cars/units in 2019 from 10.7 million cars/units in 2018. Looking ahead to 2020.
• Agricultural Products volumes decreased 7% and 2%, respectively, for the second quarter and first six months of 2020 compared with the same periods in 2019, primarily due to the impacts of the COVID-19 pandemic on ethanol and related commodities and due to lower net exports.
BNSF's operating ratio, defined as the ratio of operating expenses to revenue, was 62.8% in the fourth quarter of 2019, compared with 65.6% in the … Nonetheless, BNSF's operating ratio improved to 61.1% in the second quarter, compared with 64.8% in the second quarter of 2019. • Fuel expense decreased 58% and 37% in the second quarter and first six months of 2020, respectively, compared to the same periods in 2019.
But on an annual basis, industrial products revenue rose 1.7% to $6.1 billion, again amid higher average revenue per car/unit and lower volumes. On an annual basis, BNSF reported a net profit of $5.48 billion in 2019, a 5% increase from $5.22 billion in 2018 as lower operating expenses offset a 1.4% decline in revenues.Total revenue in the fourth quarter fell 6% to $5.84 billion amid a 6% drop in unit volumes, but a 1% increase in average revenue per car/unit helped offset the revenue decline, BNSF said.On an annual basis, BNSF’s revenue totaled $23.5 billion in 2019, compared with $23.9 billion in 2018. Annual operating expenses fell 4% to $15.4 billion amid lower volume-related costs and fuel surcharges, as well as cost-control initiatives, and a retirement plan curtailment again helped offset costs due to adverse weather conditions.Among the operating expenses, fuel expenses fell 18% in the fourth quarter to $733 million, and 12% for the year to $2.9 billion.Purchased services expenses also slipped 18% in the fourth quarter to $613 million, while on an annual basis, purchased services expenses fell 5.9% to $2.7 billion amid lower purchased transportation costs of BNSF’s logistics services business, lower drayage and lower service expenses, and higher insurance recoveries, the company said. BNSF attributed the volume declines to the pandemic, which affected ethanol and related commodities, and to lower net exports.
Operating Ratio: 64.1% (-1.8 percent vs. 2019) COVID-related comments within management's discussion of BNSF: BNSF is an important part of the national and global supply chain and, as an essential business, has continued to operate throughout the duration of the COVID-19 pandemic. © Copyright 2020, All Rights Reserved, FreightWaves, Inc Operating ratios were 61.1% and 63.3% for the second quarter and first six months, respectively, improvements of 3.7% and 3.1% compared to the same periods in 2019.
Consumer products slipped 17% to $1.6 billion amid a 12% decline in rail volume because of lower intermodal and automotive shipments as a result of the COVID-19 pandemic.Industrial products fell 26% to $1.2 billion in the second quarter amid a 26% volume decline. These changes were primarily due to lower electricity demand driven by the COVID-19 pandemic and mild winter weather, low natural gas prices and plant retirements.Operating expenses for the second quarter and first six months of 2020 were down 26% and 18%, respectively, compared with the same periods in 2019. In 2019, CSX had an operating ratio of 58.4 percent. Watching Washington, February 2019: Sizzle sells product. We believe BNSF's fundamental business remains strong and it has ample liquidity to continue business operations during this volatile period.
Like its other Class I counterparts, the COVID-19 pandemic hit "BNSF is an important part of the national and global supply chain and, as an essential business, has continued to operate throughout the duration of the COVID-19 pandemic. Average revenue per car/unit has fallen 2.7% amid an 11.7% decline in rail volumes.
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