Union Pacific Corporation said rising diesel prices are beginning to push freight from trucks to rail as shippers seek more fuel-efficient options, a shift CFO Jennifer Hamann described at the Morgan Stanley Laguna Conference alongside improving freight demand. The timing is notable because U.S. diesel prices recently exceeded $6 per gallon, reaching a record $6.29 on September 17, according to Reuters. Union Pacific is already seeing stronger intermodal activity: in the second quarter of 2026, domestic intermodal volumes rose 19%, helping drive a 2% increase in total carloads and a 12% increase in freight revenue, while freight revenue excluding fuel surcharges still rose 4%. Fuel-surcharge revenue climbed to $1.0 billion from $569 million a year earlier, and Reuters reported the company collected $91.1 million more in fuel surcharges than its fuel costs in the quarter. The same fuel-price shock raises Union Pacific's own costs, however, with the second-quarter 2026 operating ratio at 59.7% versus 59.0% a year earlier and higher fuel prices alone taking a 120-basis-point unfavorable toll, while surcharge recoveries can lag fuel-price changes by up to two months.
Union Pacific CorporationRising diesel prices push freight from trucks to rail, boosting Union Pacific intermodal volumes (up 19%) and freight revenue.
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