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

Page 11 of 15

Chris Wetherbee: Hey. Thanks. Good morning. Maybe I wanted to come back to head count and resources as we are thinking about sort of improving the network and efficiency and ultimately getting back up to sort of optimal performance. Can you give us a sense of sort of how long you think it will take until you get heads to sort of where you think to be able to support the network that you have and maybe is that a first half, second half kind of dynamic as you think about the relative growth in both periods?

Lance Fritz: Yeah. Chris, you broke up a little bit at the end. But what I heard you asking is about, we are adding headcount and resources to support network fluidity particularly in some part of the network where we are tight on crews and how long is that going to take, is it a first half, second half? So we are not putting a fine button on when exactly we declare victory. What I will say is, you look at how we are performing coming into 2023 and the network is fluid. We have still got tight spots in the network that are limiting our ability to grow and ship all the demand like in coal, maybe to a lesser extent in rock and we are hiring actively in those areas that would support the network for that growth. The pipeline is full, we have got 600 people in the pipeline and we are graduating something like 150 a month to 200 a month at this point.

So it’s kind of fundamentally being pretty well healed is happening this year. It’s just hard to say exactly when given that demand could shift around. We are still not meeting all demand and the game plan is operate a fluid network like we are right now, continue to add resources to support the demand that wants to ship and grow that volume as we are able to.

Chris Wetherbee: Thank you.

Operator: The next question is from the line of Ken Hoexter, Bank of America. Please proceed with your question.

Ken Hoexter: Hi. Good morning and thanks for taking the question. Just, Jen, maybe can you put a range on the OR improvement, I know you said just you are looking for improvement, given the background issues that you talked about. Can you clarify how much of that is impacted by service and I guess you typically see 200 basis points of deterioration from

Lance Fritz: Yeah.

Ken Hoexter: fourth quarter to first quarter. Is there anything unseasonable or different this year, you pointed out a couple of things that should look different? And then a second one just for, Lance, something totally different, any thoughts on the STB Open Access mandate? Anything that you expect out of that or remediation expectations from CPK issue? Thanks.

Jennifer Hamann: So, Ken, I am going to refrain from giving the order of magnitude on the OR guide or giving you a range. It really is just too soon in the year. We are sitting here on January 24th to give that to you. I could try, but I am sure I’d be wrong. So we are going to resist that temptation. I think the important thing to think about is we are going to work to improve as fast as we can, as hard as we can, you have seen us do that and demonstrate that, we are not trying to meter any progress. Our goal is to deliver that better service, be more fluid, and with that, leverage more volumes across the topline. There are some other things that influence it, obviously, when you think about fuel and inflation. But the team knows what those are and they know how to go about it.

Page 11 of 15