BNSF’s slow recovery through its rail freight operationsBNSF generated around 24.49 billion U.S. dollars in freight revenue in 2022, 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 2022, the railroad hauled 1.6 million carloads of industrial products and over 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 2022 performance improved compared to 2021, when consumer product demand dropped amid the first peaks of the Covid-19 pandemic, especially in the automotive sector. By example, its operating revenue was up some 11.6 percent year-over-year, and surpassed its pre-pandemic earnings from 2019. However,despite the improved performance, the railroad operator’s operating expenses also grew in the 2022 fiscal year. Fuel price inflation through 2023 due to the continuation of the war in Ukraine might lead to further expense increases.
A global and regional freight leaderBNSF Railway is often ranked among the best Class I freight rail companies worldwide. The Union Pacific Railroad Company is its main competitor in the NAFTA market. With Union Pacific’s freight revenue reaching over 23 billion U.S. dollars in 2022, 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 9.5 million carloads transported in 2022, it dwarfed its main competitor by over one million.
North American railroads tend to be the highest valued railway companies worldwide, with Union Pacific topping the sector ranking in 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 2022.