Union Pacific Corporation (NYSE:UNP) Q2 2023 Earnings Call Transcript

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And so that’s something that we’ll just keep you updated, but I want to make sure you do understand that, that will be a bit of a headwind. But as we get greater clarity of that as we go through our rollout and start that rollout and obviously, we still need to get SMART-TD done as well, we’ll be in conversation about that.

Lance Fritz : So Justin, I think as we look into the back half of this year, improving productivity, the hiring pipeline tones down a little bit, but we’re still hiring. It probably looks like year-over-year about equal, I think, is what Jennifer was saying. Not sure what’s going on in the marketplace. So we got to we’ve got to do everything we can to capture all the business that’s available to us. And then fuel is going to be a real headwind in the back half. Offsetting that, we get a tailwind from implementing the brake person agreement. And as we implement the work rest schedule, I am confident that generates both productivity and service product improvement. The issue is timing and magnitude.

Operator: Our next question is from the line of Brandon Oglenski with Barclays.

Brandon Oglenski : Lance, congrats on career here. And I guess, I know you guys want to ask about the quarter, but just looking back, Lance, over your course of being at Union Pacific, what do you think went really right? And what do you think maybe could have been done better to keep track maybe with potentially more volume growth looking back? And maybe looking forward, what do you think are the biggest challenges or opportunities for the industry, maybe not even just UNP? The technology, is it regulation, is it M&A? Would love to get your thoughts.

Lance Fritz : Yes, Brandon, thank you for that question. And we’ll try to keep this to be the only question on that. So I’ll try to make the answer fulsome. In terms of what am I proud of, what did I think we got right as a team, one is I love the team that we’ve assembled. It’s world-class. I love the work that we’ve done on sustainability. I love the fact that we are an inclusive workforce. You can see it in our Board. You can see it on our management team. I like the progress that we’ve made on safety. We’ve got more to do there. And I love the fact that we transitioned from our previous transportation model and way of running the railroad to a PSR model that’s a better service product for our customers. In terms of what we needed to do better, we were not consistent and reliable through my 8.5 years of serving as the Chairman, President and COO.

And that needs to be remedied. As we look into the future, that’s exactly what we need to continue to do. We’ve got a strategy, serve, grow, win together, that’s built off the foundation of consistent and reliable service. I am confident we’re oriented, organized and capable of doing that. We’ve got to prove it to our customers. Because Brandon, our customers tell us, as we demonstrate reliability, there’s more of their order book available to us, plus there’s more market participants that will start doing business with us. That’s the unlock for growth. And growth is the unlock for significant value creation in the future for everybody, for all of our stakeholders.

Operator: Our next question is from the line of Ravi Shankar with Morgan Stanley.

Ravi Shanker : Again, from me as well, congrats, Lance, on a great career. Just on the volume guide itself, can you confirm just how much that kind of volume outlook did move? Because you did — you’re now going to be kind of below a raised benchmark. So just trying to get a sense of kind of how much that did move. And also, is industrial production the right benchmark for your kind of volume growth in the long term just given the consumer exposure here? Or do we have to look at some combination of IP plus GDP?

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