UNP · Earnings call · 2026Q3T · Full report

Operating Expense Trends

UNION PACIFIC CORP · 2026-10-22 · Importance 54 · Surprise 40

Third-quarter operating expense increased 15% year over year to $4.3 billion, primarily because of higher diesel prices. Compensation and benefits expense increased 4%; cost per employee rose 5% from wages, incentive compensation, and training, partly offset by a 1% headcount decline despite 6% volume growth. Fuel expense grew 69% as average fuel price increased 64% and gross ton-miles rose 4%; the price per gallon increased from $2.56 to $4.21, adding 140 basis points to the operating ratio. Purchase services and material expense rose 9% due to inflation, intermodal costs at Loup and the railroad, and surge locomotives, partly offset by lower merger costs; equipment and other rents declined 3%.

Key facts

• UNION PACIFIC CORP's Q3 2026 operating expense increased 15% to $4.3 billion, primarily from higher diesel fuel prices.
• UNION PACIFIC CORP's Q3 2026 compensation and benefits expense increased 4%; cost per employee rose 5% due to higher wages, incentive compensation, and training costs.
• UNION PACIFIC CORP's Q3 2026 purchase services and materials expense increased 9% due to inflation, intermodal-related Loup and railroad costs, and surge locomotive costs; lower merger costs partly offset the increases.
• UNION PACIFIC CORP's equipment and other rents declined 3% versus 2025, as lower car hire and operating lease expense more than offset volume growth.
• UNION PACIFIC CORP said increased intermodal volumes raised drayage costs at its Loup subsidiary and costs at third-party-operated ramps.
• UNION PACIFIC CORP said its average pay, including benefits, was $160,000.