About Lance Fritz
Lance Fritz, former Chairman, President, and CEO of Union Pacific, has discussed the company's operational and financial performance in several media appearances. In October 2022, Fritz stated that the company made "sequential improvement" in network fluidity from the second to third quarter, and he anticipated a return to normal operations in the fourth quarter. He attributed volume pullbacks to cooling consumer demand, particularly in domestic intermodal and parcel shipments, while noting strong demand in coal, grain, and some industrial segments. Fritz also addressed labor negotiations, saying he was "less comfortable" after the BMWED Maintenance of Way employees failed to ratify a contract, but he anticipated closing agreements by the end of the year.
In 2023, Fritz described the hiring picture as "very difficult" in 2022, particularly in rural areas, and noted that Union Pacific was using hiring bonuses and a referral program to attract workers. He discussed the company's implementation of Precision Scheduled Railroading (PSR) to lower costs and improve the operating ratio. Regarding the regulatory environment, Fritz said the Surface Transportation Board (STB) had done "a very good job" of balancing its decisions with the health of the freight rail network. Earlier, in 2022, Fritz addressed supply chain disruptions, citing high import demand, a shortage of truck drivers and warehouse labor, and the impact of COVID-19. He also described organized train theft in the Los Angeles area as a "real problem," stating that the company was working with law enforcement and investing in security measures.
Source: AI-verified profile updated from Lance Fritz's recent appearances.
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✨ AI-enhanced transcript with speaker attribution
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Morgan0:06
Succeeding Lance Fritz. That special guest is Lance Fritz, the current and outgoing CEO, President, and Chairman of Union Pacific. Lance, it's great to speak with you today. You did report earnings as well. First, what's really moving the higher this morning is this succession news. We knew you would be retiring this year. That news came earlier in the year after a key stakeholder in the company became activist. I guess just walk me through Jim Vena, specifically, and how this came to be given the fact that he's a well-known entity. Analysts seem to be very surprised by this news.
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Lance Fritz0:51
Jim is an absolutely perfect pick for us at this time, Morgan. And thank you for hosting me this morning. We started the conversation with our board about a year and a half ago on being ready for my ability to retire at the back half of next year or the front half of this year. And we made a stronger point on this: it would happen this year. And the board went through an exhaustive and thorough search, and they identified the individual that is perfect for running us. Jim Vena, a great track record and has a history with us. He was our Chief Operating Officer in 2019 and 2020, and an adviser in 2022. We're looking forward to working on all the things we're working on right now.
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Morgan1:43
What does that include? And part of the reason the stock is reacting the way it is, given what that means for potential for operating ratio, potential for margin improvement, service improvement, and the like.
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Lance Fritz1:57
So Morgan, we're already well down the path on our PSR journey, our Precision Scheduled Railroad journey. Most of the being more efficient and reliable, Jim's goal right now as he joins the railroad is to be the safest railroad in America, in the industry. Second is to provide consistent and reliable service to our customers so that third, they help us grow. Growth is one of the key factors as we look at creating long-term value into the future, and Jim is laser focused on that.
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Morgan2:39
Let's talk a little bit about the quarter specifically. Missed estimates. Revenue per car was down as well, but head count was up. I guess, walk me through the dynamics that you're seeing right now and how much that is a reflection on the broader economy and activity you're seeing in real time.
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Lance Fritz3:02
It was a noisy quarter. We were down on volume, and that generated 5% down on revenue. On the cost side, when it comes to labor and compensation, we signed a deal with our SMART TD union, that's the conductors on the transportation craft, regarding break persons. And that cost us just under $70 million in the quarter. Now, it gets a two-year payback, but the up-front cost is this quarter and now we implement it. We're about 60% implemented, so that payback is looking quite good. There were two other things we did in the quarter. One is we reached the last agreement on paid sick leave with all of our craft. And that's a real cost. It's a wonderful benefit for our employees to get the opportunity to, when they're sick or their family members are sick, take time off, be paid.
