Thursday, October 21, 2010

Railroads Get a Boost

Not everyone is struggling in this economy, as railroads see strong surges in profit.

Union Pacific Corp.'s third-quarter profit jumped 51% as the railroad company posted volume growth for the third consecutive quarter and noted freight revenue improved across all business segments.

Chairman and Chief Executive Jim Young said strong volume growth, pricing gains and operating efficiency "combined to produce another record quarter" for the company. Results easily topped Wall Street's expectations.

The company's results further highlight the transport sector's rebound from last year's moribund levels, as the U.S. economic recovery continues. Already, peer CSX Corp. and transport companies J.B. Hunt Transport Services Inc. and United Parcel Services Inc. have reported results above prior-year levels as volumes jump higher. Union Pacific has said it sees a peak autumn intermodal shipping seasons, although it warned of industry uncertainty.

As the dollar weakens and commodity prices rise, commodity movers like railroads should see a boost, as I wrote about a year ago, when Warren Buffet bought railroad company Burlington Northern.

I should really start listening to myself.

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