UNP · Earnings call · 2026Q3T · Full report

Fuel Cost Pressure

UNION PACIFIC CORP · 2026-10-22 · Importance 70 · Surprise 56 · No source text

Third-quarter average fuel price rose to $4.21 per gallon from $2.56 a year earlier, increasing fuel expense 69% and adding 140 basis points to the operating ratio. Management expected fourth-quarter 2026 fuel prices to average around $4.85 per gallon, a continued challenge to reported margins. Union Pacific said fuel surcharges help address fuel costs, while rail's fuel efficiency can attract freight from trucks when fuel prices rise. The company reported a 2% improvement in fuel-consumption rate in the quarter, supported by longer trains, locomotive deployment, and operating technologies.

Key facts

• UNION PACIFIC CORP's Q3 2026 fuel expense grew 69%, with average fuel price up 64% and gross ton-miles up 4%.
• UNION PACIFIC CORP's average fuel price increased from $2.56 to $4.21 per gallon year over year, adding 140 basis points to its operating ratio.
• UNION PACIFIC CORP expected average fuel prices of around $4.85 per gallon in Q4 2026, challenging its reported operating ratio.
• UNION PACIFIC CORP expected fourth-quarter fuel prices of around $4.85 per gallon, compared with a third-quarter average of $4.21 per gallon.
• Fuel had a 140-basis-point drag on UNION PACIFIC CORP in the third quarter, and management expected a little greater impact in the fourth quarter.
• UNION PACIFIC CORP's fuel conservation improved 2% in Q3 2026, and management said it would continue pursuing further improvements.
• Higher year-over-year fuel prices and related fuel surcharge added 900 basis points to UNION PACIFIC CORP's freight revenue in Q3 2026.
• UNION PACIFIC CORP's fuel consumption rate decreased 2% and set a new quarterly record.

Impact estimates