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Union Pacific CEO sees volume growth despite oil prices

CHICAGO -- The new top executive of Union Pacific Corp. said on Thursday he felt a sense of momentum at the No. 1 U.S. railroad as it works to improve service amid growth in the U.S. economy, but said the impact of falling oil prices remains an u...

CHICAGO - The new top executive of Union Pacific Corp. said on Thursday he felt a sense of momentum at the No. 1 U.S. railroad as it works to improve service amid growth in the U.S. economy, but said the impact of falling oil prices remains an unknown factor.
“Overall, we feel this year is going to be positive for (freight) volume growth,” said Chief Executive Officer Lance Fritz, who was appointed to his new role on Thursday. “But the outlook for oil is a little bit murky.”
“But low oil prices are great for the broader economy and subsections of the economy,” he added, which should boost other parts of the Omaha, Neb.-based railroad’s business.
Altogether, around 4.5 percent of Union Pacific’s freight volumes are related to shale drilling in North Dakota. Only around 1.5 percent comes from hauling the oil itself, while 2.5 percent comes from fracking sand and the rest is related to drilling equipment and pipes.
Fritz, 52, is somewhat of a departure for the company’s chief in command of a major railroad, with a career that included stints at General Electric Co. and Cooper Industries - now part of Eaton Corp. 
The CEOs of the three other major railroads have been with their companies since the 1970s.
“I think it’s going to help,” Fritz said of his experience outside the industry working for companies that are railroad customers. “My experience in other industries will help me understand them.”
He takes over as the company just reported a record quarterly profit, but also at a time the industry has been under pressure due to service problems that began last winter and plagued railroads through much of 2014 as freight demand rose.
The increased demand has enabled the railroads to start raising prices, but has also brought increased scrutiny from regulators and calls from customers to improve service.
“That is going to be a challenge for this year,” Fritz said. “But we are making good progress in terms of recovering our service and we will continue to do so.”

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