Railroad Industry Seeks Better Days in 2002

OMAHA -- The rail industry struggled during 2001 but the stock of Omaha-based Union Pacific Corp. rose at year's end and railroads were looking for better days this year, the Omaha World-Herald reports.

Railroads were hit early in 2001 as the economy began to cool. As the demand to ship goods declined, the companies responded by cutting jobs, capital projects and other budget items. In addition, diesel fuel costs rose, driving up operating costs.

The railroads' stocks took a hit after Sept. 11 as part of general market weakness.

The industry is poised to do better in 2002. Union Pacific Corp., whose rail subsidiary is the nation's largest railroad, as well as rival Fort Worth, Texas-based Burlington Northern Santa Fe Corp., which has the second-largest railroad, are trying to take market share away from trucking companies.

Both railroads are eyeing alliances and partnerships with Eastern or Canadian railroads to expand shipping service outside their networks, which cover the western two-thirds of the United States. And both railroads are counting on coal, a profitable shipping commodity.

Union Pacific Corp.'s stock rose about $6, or 12 percent, from Jan. 2 to the end of the year, when it traded higher than $56.

Burlington Northern Santa Fe Corp.'s stock ended the year about where it began, above $28 a share. The company has reported lowered earnings for the past four quarters, due to rising costs, lost contracts and the slowed economy.

Union Pacific and Burlington Northern's fourth-quarter earnings come out later this month.