Union Pacific reported second-quarter 2026 net income of $2.0 billion, or $3.36 per diluted share, up from $1.9 billion, or $3.15 a year earlier, even as its operating ratio worsened to 59.7% from 59.0%.
Revenue for the quarter rose 12% to $6.864 billion from $6.154 billion. Freight revenue climbed 12% to $6.518 billion, while total operating revenue increased 12% to $6.864 billion. For the first six months, total revenue advanced 7% to $13.081 billion from $12.181 billion, and freight revenue rose 8% to $12.411 billion from $11.534 billion.
The top line was driven by fuel surcharge revenue, volume gains, and pricing. Freight revenue from fuel surcharge programs jumped to $1.0 billion in the second quarter from $569 million a year earlier. Average revenue per car increased 9% in the quarter to $3,014 from $2,764, while revenue carloads rose 2% to 2.163 million from 2.114 million.
Domestic intermodal was the biggest volume driver in the quarter, with carloads up 19%. Total intermodal carloads increased 4% to 853,000, but international intermodal fell 14% to 176,000 and coal carloads dropped 17% to 176,000. Grain and grain products carloads rose 12% to 242,000, and plastics and industrial chemicals carloads increased 3% to 183,000.
By commodity, second-quarter freight revenue rose to: Grain and grain products: $1.106 billion, up 15% Fertilizer: $217 million, up 8% Food and refrigerated: $272 million, up 2% Coal and renewables: $448 million, down 4% Industrial chemicals and plastics: $685 million, up 6% Metals and minerals: $621 million, up 11% Forest products: $356 million, up 5% Energy and specialized markets: $724 million, up 9% Automotive: $703 million, up 11% Intermodal: $1.386 billion, up 26%
For the first half, freight revenue rose to: Grain and grain products: $2.163 billion, up 13% Fertilizer: $453 million, up 10% Food and refrigerated: $519 million, down 2% Coal and renewables: $934 million, up 6% Industrial chemicals and plastics: $1.340 billion, up 7% Metals and minerals: $1.176 billion, up 9% Forest products: $674 million, up 2% Energy and specialized markets: $1.387 billion, up 7% Automotive: $1.263 billion, up 4% Intermodal: $2.502 billion, up 9%
Operating expenses increased 13% in the quarter to $4.101 billion from $3.629 billion. Fuel expense was the biggest driver, surging 63% to $938 million from $576 million. Purchased services and materials rose 10% to $709 million, depreciation increased 4% to $638 million, and other operating expenses climbed 13% to $362 million. Compensation and benefits edged down 1% to $1.240 billion.
For the first half, operating expenses rose 8% to $7.860 billion from $7.285 billion. Fuel expense increased 34% to $1.581 billion. Purchased services and materials rose 9% to $1.382 billion, depreciation increased 4% to $1.271 billion, and other expenses climbed 7% to $726 million.
Operating income increased 9% in the quarter to about $2.763 billion from roughly $2.525 billion a year earlier. The company said the operating ratio deterioration was primarily tied to higher fuel prices, with the average fuel price per gallon up 60% from last year.
Mexico-related freight revenue increased 10% to $828 million in the quarter and 6% to $1.6 billion year to date, supported by volume growth of 5% and 4%, respectively, along with higher fuel surcharge revenue and pricing.
Operationally, freight car velocity improved 5%, terminal dwell improved 7%, system train length increased 2%, workforce productivity improved 5%, and locomotive productivity improved 1%. Both service performance index measures were 95%. As a result of these announcements, the company's shares have moved 3.99% on the market, and are now trading at a price of $304.22. Check out the company's full 10-Q submission here.
