- The operating ratio has fallen
- Volatile volumes
The board of railroad stock Union Pacific (US:UNP) received a wake-up call in early 2023. Major shareholder Soroban Capital Partners told management that, during Lance Fritz's eight-year stint as chief executive, the company had “ranked the worst in every key railroad operating metric: safety, volume growth, revenue growth, cost management, Ebit growth, and total shareholder return”.
The hedge fund called for former chief operating officer Jim Vena to be brought back, and he duly returned to the company as chief executive last August as Fritz retired. Vena's efficiency initiatives have had an impact. For one thing the operating ratio, which measures operating expenses against revenue, came in at 60.3 per cent at the end of September this year, compared with 63.4 per cent in the comparative period.