BNSF’s net profit for the first quarter of 2023 slipped 9% amid a 10% drop in carload volumes, the railroad’s parent company, Berkshire Hathaway (NYSE: BRK.B), reported Saturday.

Net income was nearly $1.25 billion in the first quarter, compared with $1.37 billion year over year. 

Total revenues were $6 billion, up 1% from $5.97 billion a year ago. Of that, freight revenues were $5.75 billion, up 2.2% from nearly $5.63 billion in the first quarter of 2022. 

BNSF attributed the revenue increase to a 14% gain on average revenue per car/unit that came from higher fuel surcharge revenue. Increased rates per car also helped.

Breaking down freight revenues by segment, BNSF’s consumer products revenues fell 10% to nearly $1.87 billion on a 16% decrease in volumes. That volume decline was primarily due to lower intermodal shipments, which stemmed from lower West Coast imports, as well as the loss of an intermodal customer, BNSF said. However, an increase in automotive volume due to higher vehicle production partially offset the volume loss of the overall segment. 

Agricultural products revenue rose 9% to nearly $1.48 billion despite a 2% decrease in volumes. Lower grain exports put pressure on agricultural products volumes, although higher volumes of domestic grains, renewable diesel and feedstock partially offset this decline. 

Industrial products revenue grew 6% to $1.38 billion despite a 4% decrease in volumes due to lower demand for chemicals and plastics, lumber, and paper shipments, BNSF said. 

Coal revenues increased 16% to $1.03 billion despite a 4% decline in volumes. The drop in volumes was primarily due to weather-related impacts and moderating demand due to lower natural gas prices, according to BNSF.

Meanwhile, operating income was $1.9 billion, down 9% year over year from $2.04 billion. Operating ratio, a metric that investors sometimes use to gauge the financial health of a company, was 68.4%, compared with 64.6% last year. A lower OR can imply improved financial health.

And expenses grew 6% to $4.16 billion owing to several factors, according to BNSF: a 12% growth in fuel expenses, a 7% increase in compensation and benefits expenses due to increased head count, wage inflation and lower productivity, and a 22% increase in materials and other expenses due to inflation, increased casualty and litigation costs, and higher property and miscellaneous taxes.

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