OMAHA, Neb. -- Union Pacific's second-quarter profit jumped 59% as the railroad hauled 22% more cargo than a year ago when shipments fell to the lowest levels of the coronavirus pandemic.
The Omaha, Neb.-based railroad said Thursday that it earned $1.8 billion, or $2.72 per share, during the quarter. That's up from $1.13 billion, or $1.67 per share, a year ago.
The results surpassed Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $2.55 per share.
Union Pacific Chief Executive Officer Lance Fritz said the railroad delivered strong results despite the ongoing congestion issues in West Coast ports and at the key rail hub of Chicago as demand for imported products surged. Some of those problems are likely to linger through the rest of the year because of a shortage of trucks to haul shipping containers out of the ports and rail terminals.
"It's hard to increase capacity in any part of the supply chain rapidly," Fritz said. "And the demand is very strong."
This week Union Pacific temporarily stopped hauling shipping containers from West Coast ports to Chicago for several days to help alleviate the shipping congestion in that city.
The number of shipments Union Pacific handled during the quarter was up in every category of freight. A year ago, restrictions related to the pandemic caused more than a 20% drop in shipping volume across all major railroads. Current shipping volumes are nearly even with the second quarter of 2019 signaling that demand is back at pre-pandemic levels.
"There is strength across most of the economy," Fritz said.
Union Pacific said it now expects shipping volume to grow 7% overall this year as the economy continues to recover from the pandemic. That's up slightly from its previous prediction of 6% volume growth.
Edward Jones analyst Jeff Windau said Union Pacific has handled the surge in volumes efficiently so far without hiring many new workers, and it has been able to deliver strong profits in the process by increasing prices while handling more freight.
The railroad said its revenue grew 30% to $5.5 billion in the period, which also topped Wall Street forecasts. Three analysts surveyed by Zacks expected $5.38 billion.
Fritz said a recent executive order that President Joe Biden issued to encourage competition could hurt railroads if it prompts the Surface Transportation Board to issue new regulations on the industry. He said railroads play a key role in the economy and are already helping accomplish several of Biden's goals by helping companies reduce their emissions compared with shipping by truck, offering high-paying union jobs and paying for their own tracks and other infrastructure.
"This executive order puts a headwind in front of that," he said.
Union Pacific shares have increased slightly more than 4% since the beginning of the year, while the S&P 500 index has increased 16%. The stock has climbed 22% in the past 12 months. It's shares rose 1% Thursday after the earnings report was released.
Union Pacific is one of the nation's largest railroads, and it operates 32,400 miles of track in 23 Western states.