CEO Lance Fritz sees ‘signs of optimism’ in multiple markets.
“Across our markets, we’re seeing a few signs of optimism,” said Union Pacific CEO Lance Fritz told CNBC in a “Mad Money” interview, stating that the railroad operator has reasons to be positive about its business as the U.S. economy recovers from its coronavirus-driven halt, as well as industries like automotive, housing and grain, the last of which is related to the U.S.-China trade deal.
Union Pacific reported operating revenues dropped 3% compared with the same period a year earlier. Due to that decrease, Fritz said, Union Pacific has had to furlough employees in roles such as train operators and car maintenance. Fritz said in an effort to share the burden across the company, management employees are required to take one unpaid week of absence per month for May, June, July and August. Executives and the board have taken a 25% pay cut, Fritz said.
As the U.S. economy has been pushed into a recession, online shopping. peaked like never before, and the Union Pacific chief pacific noticed that. “Our parcel business is up strong double digits right now,” he said. “We are seeing the e-commerce demand flow through to our rail business.”
“The whole idea was to make sure we maintain the flexibility to have the workforce we need when the economy comes back, but be prudent and react to be down 25% on volume (…) For us, it means the supply linkage between the U.S. economy, the Mexican economy and the Canadian economy are going to continue to grow and become more and more powerful,” Fritz said. “We as a trading bloc are going to be much more competitive globally. It’s just a home run.”