BNSF’s slow recovery through its rail freight operations
BNSF generated around 21.9 billion U.S. dollars in freight revenue in 2021, making its rail freight operations its primary source of income. The railway operator hauls products from consumer to coal, agricultural or industrial commodities. Its major share of freight revenue comes from the consumer products sector, such as automotive, which makes up over 37 percent of its freight earnings. In 2021, the railroad hauled 1.7 million carloads of industrial products and 1.5 million carloads of coal products. While coal is one of the key commodities traded across North America, forecasts are not optimistic for this commodity. As the United States moves toward more sustainable and renewable energy uses, the electric power sector—the leading sector for coal use in the U.S.—has been steadily decreasing its coal consumption. This market development will increase the importance of other types of freight as BNSF’s primary source of income.The company’s 2021 performance improved compared to 2020, when consumer product demand dropped amid the first peaks of the Covid-19 pandemic, especially in the automotive sector. However, while its operating revenue was up some 11.6 percent year-over-year, it did not surpass BNSF’s 2019 pre-pandemic earnings. Concurrently, the railroad operator’s operating expenses also grew in the 2021 fiscal year. Fuel price inflation through 2022 due to the war in Ukraine might lead to further expense increases.
A global and regional freight leader
BNSF Railway is often ranked among the best Class I freight rail companies, which represented an operating revenue of over 66 billion U.S. dollars in 2020. The Union Pacific Railroad Company is its main competitor in the NAFTA market. With Union Pacific’s freight revenue reaching over 20.24 billion U.S. dollars in 2021, the two companies held most of the market in terms of revenues. BNSF was also the leading North American railroad company based on carloads. With close to 10.14 billion carloads transported in 2021, it dwarfed its main competitor by over two billion.North American railroads tend to be the highest valued railway companies worldwide, with Union Pacific topping the sector ranking as of May 2022. However, BNSF’s parent company dwarfed Union Pacific a year earlier, with a market capitalization over four times that of the railway operator. BNSF was Berkshire Hathaway’s sixth-largest source of revenue in 2021.
