BNSF 1Q23: Revenue Up Despite Lower Volumes; OR Increases

(BNSF Photograph)

BNSF on May 8 released first-quarter 2023 financial results, including operating income of $1.856 billion, a 9% decline from the prior-year period’s $2.041 billion, and an operating ratio (OR) of 68.4%, a 3.8-percentage-point increase compared with 2022’s 64.6%.

Net income for the three-months ended March 31, 2023 was at $1.247 billion, down 9% from first-quarter 2022 ($1.371 billion).

BNSF’s total revenue for the quarter came in at $6.019 billion, up 1% from first-quarter 2022’s $5.968 billion, which the Class I attributed primarily “to a 14% increase in average revenue per car/unit resulting from higher fuel surcharge revenue driven by higher fuel prices along with increased rates per car, partially offset by a 10% decrease in unit volume.”

According to BNSF, revenue changes for first-quarter 2023 also reflected the following:

• Consumer Products volumes fell 16% from first-quarter 2022, “primarily due to lower intermodal shipments resulting from lower west coast imports and the loss of an intermodal customer, partially offset by an increase in automotive volume from higher vehicle production.”
• Agricultural Products volumes dipped 2% from the same period last year, “primarily due to lower grain exports, partially offset by higher volumes of domestic grains, renewable diesel and feedstocks.”
• Industrial Products volumes decreased 4% from first-quarter 2022, “primarily due to lower demand for chemicals and plastics, lumber, and paper shipments.”
• Coal volumes dropped 4% compared with the same period last year, “primarily due to weather related impacts and moderating demand due to lower natural gas prices.”

BNSF’s operating expenses for first-quarter 2023 came in at $4.163 billion, up 6% from the prior-year period’s $3.927 billion. The railroad attributed a “significant portion” of the increase to fuel expense up 12%, “primarily due to higher average fuel prices, partially offset by lower volumes,” and locomotive fuel price per gallon up 16%; compensation and benefits expense up 7%, “primarily due to increased headcount, wage inflation and lower productivity”; purchase services expense down 6%, “primarily due to lower purchased transportation by our logistics services business, partially offset by general inflation”; and materials and other expense up 22%, “primarily due to general inflation, increased casualty and litigation costs, and higher property and other miscellaneous taxes.” According to BNSF, there were “no significant changes in depreciation and amortization or equipment rents or interest expense.”