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

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Lance Fritz: Well, Kenny, sustainability has also been playing a bigger and bigger role in that, some of our sophisticated customers, we are helping them understand and they are asking us for greater detail on how we can be part of their sustainability initiatives and that’s driving more look at us as opposed to less look at us. We just joined the Dallas Sustainability Index and that’s just a one marker of many that say that we are quite serious in making good progress in those areas.

Kenny Rocker: I mean, Lance, you talked about it a little bit earlier, if you look at our car velocity from the summer to now, we have seen some improvement, and Eric and I were talking about this a couple of days ago. If you look at third quarter to fourth quarter sequentially on our Premium network, that is improving as we onboard at Schneider. So that gives us a lot of confidence.

Lance Fritz: Right.

Jordan Alliger: And just sort of — just continuing on that, I mean, the other side of shares, the West Coast probably lost to the East Coast this year for a myriad of reasons. Do you think some of that shifts back over the course of 2023?

Kenny Rocker: I — some of that was really, I think, labor challenges that you saw in the port and a little bit of ambiguity on what they thought might happen. I think as we see that clear up on the port that you will see a little bit more of that volume come back to the West Coast port. Again, everything that we are doing, all of our investments around Inland Empire, the G4 relo would act, the Dallas to Dock and Dallas. I am telling you we are bullish to make sure we can make those areas more competitive for the customers.

Jordan Alliger: Thank you.

Lance Fritz: Yeah. Thank you.

Operator: The next question is from the line of Cherilyn Radbourne with TD Securities. Please proceed with your question.

Cherilyn Radbourne: Thanks very much and good morning. My question sort of picked up on that last one. I did want to ask about the next outlook for International Intermodal. Clearly, the inventory cycle is the most important factor there. So I am curious whether implicit in your guidance is the potential for a second half recovery in Intermodal. And then along with that, I was also curious on your thoughts regarding the timing of a labor settlement on the West Coast and what you thought for that would mean for market share in LA, Long Beach, which I think you just addressed?

Lance Fritz: Let me start, Kenny, and I will talk to the labor negotiation that’s going on in the West Coast. So that started up, I want to say, in July of last year. There has been a negotiation. There hasn’t been a lot of progress announced publicly. But the port directors share with us that they have confidence they are going to reach an agreement that there’s the temperature is low and there’s a line of sight to reach agreement. So from that perspective I think we are going to be okay.

Kenny Rocker: Yeah. As we are spending time with customers, as a mixed bag when they think some of these inventory issues will get resolved. So some are saying back half of third quarter. For us, we are not going to try to time that or be so precise at the time. What we are really focused on is making sure that we have got the service product where it should and I just want to double down on what I said sequentially, we are seeing that improvement. We have onboarded a large customer and we are walking towards trying to capture that growth when it shows up or when a pop.

Cherilyn Radbourne: Thank you.

Operator: The next question is from the line of Ravi Shanker with Morgan Stanley. Please proceed with your question.

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