Union Pacific Corporation (NYSE:UNP) Q4 2022 Earnings Call Transcript

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Ravi Shanker: Thanks. Good morning, everyone. Two-part question here, I think quality of life is a big focus area for you and a lot of your peers. What does that mean exactly in terms of kind of what you are negotiating and what your prospective employees are looking for? How do we think about that in terms of our costs, et cetera? And just also, I don’t think you have said the word 55 OR on this call so far, obviously, that seems like a fair way away given where we are macro wise. What is the path to get there, kind of given the quality of life, given the kind of EV inflation, everything else kind of, is that just going to need like a really big lift from the topline to bring that gap in the coming years?

Lance Fritz: Yeah. Thanks for the question, Ravi. So I will start with just a quick comment on quality of life, and then maybe, Eric, you can follow up on what we are negotiating there, and then, Jennifer, you can handle a 55 OR. So one thing that came out of the PEB and is in the tentative agreements that were signed and now agreed to was directive to negotiate things like unscheduled work going to scheduled work. There are other things bundled into the quality of life issues for our craft employees, but that’s a big one. There’s a fair amount of our craft employees that are on call in an unscheduled job and that’s the way that the staffing for the railroad is handled. And so we are actively in those discussions, because there is a path forward to be able to create more predictability in that work for those craft professions. I will let Eric kind of get into the detail.

Eric Gehringer: Yeah. So, Ravi, as one example, we are engaged right now in a pilot where we are focused on some adjustments to the way that we collectively do the work where we actually have a group of people in the state of Kansas that are working a defined schedule. So to Lance’s point, today, the vast majority of our employee base is on an on-call basis. So that’s on the TE and Y side of the transportation side. In this pilot, we have carved out a handful of people where they actually are in a specific schedule and what we are watching for is to ensure that the actual days that we have planned for them to have off occur and that that’s translating then to more availability on the days in which they are scheduled to work.

That’s the win-win solution that we are looking for and we are focused on. And we are working on it for the entire period of this year and I bet it carry into the next year because we are putting so much thought into making sure that the net impact is beneficial for both sides.

Jennifer Hamann: Yeah. And then, Ravi, to your 55 OR questions, I mean, you have heard us talk that, that is still our goal and I will reiterate that again. We have not put a new time line on that because of all the things that you have heard us talk about here today in terms of the challenges that we are facing. But that doesn’t mean we can’t improve, that doesn’t mean we don’t have a path to improve and a path to get there. And relative to the quality of life, it really goes back to what you have heard from both Lance and Eric, as we improve crew availability, as we improve predictability, that improves our service product and it improves our ability to grow and with that service product comes further pricing opportunities as well. So it’s a virtuous circle in my view and that’s how we are going about pursuing those things.

Ravi Shanker: Thank you.

Operator: The next question is from the line of Chris Wetherbee with Citi. Please proceed with your question.

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