OMAHA, Neb. — Union Pacific’s third quarter profit grew 9% as West Coast imports surged and drove the railroad’s total volume up 6%.

The Omaha, Nebraska, railroad said Thursday that it earned $1.67 billion, or $2.75 per share. That’s well ahead of the $1.53 billion, or $2.51 per share, Union Pacific earned a year ago, but just behind what Wall Street expected.

The analysts surveyed by FactSet Research expected the railroad to report earnings per share of $2.79. Shares remained down more than 4% in midmorning trading after the report was released. Still, CEO Jim Vena was pleased with the results because of the way UP handled the surge in volume while maintaining good service.

“Our third quarter results demonstrate the success of our strategy,” Vena said. “The entire Union Pacific team is focused on delivering for our customers and shareholders; and is energized to build on these accomplishments to drive sustainable long-term success.”

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West Coast Import Surge Challenges Railroad Operations

Union Pacific had to scramble to handle a 33% jump in the number of shipping containers coming out of West Coast ports as both major Canadian freight railroads and the East Coast ports all halted operations at different times as they grappled with labor disputes. Vena said the railroad had to quickly reposition some of its equipment and pay more overtime, but Union Pacific and the L.A./Long Beach ports in southern California handled the surge without significant delays in how quickly ships were unloaded.

“I think it is fair to say everyone did their part to handle an increase not forecasted by anyone. That is what it means to deliver what is possible,” Vena said in a letter to employees. “I am very proud of the team and everything we were able to do.”

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Mixed Shipment Performance Across Sectors

The number of shipments Union Pacific delivered in the quarter was mixed across different sectors. Intermodal shipments of cargo containers led the growth, but those generate the least revenue per car on average. Coal continued its long-term decline, but metals, minerals and auto shipments were also down.

The railroad expects its fourth quarter profit will closely mirror the third quarter and top last year’s results. Union Pacific said it sees positive momentum in its profits as its service and efficiency and pricing all continue improving.

Edward Jones analyst Jeff Windau said in a research note that even while hauling more less-profitable freight and dealing with reduced fuel surcharges, Union Pacific managed to improve several key operating measures. The railroad said freight car velocity and locomotive productivity both increased 5%.

“Jim Vena, a CEO known for his ability to drive performance, should help the company to continue improving network efficiency and productivity, and drive improvements in profitability,” Windau wrote.

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Financial Outlook and Capital Investments

Union Pacific didn’t make any change in its plan to repurchase roughly $1.5 billion of its shares this year and invest $3.4 billion in capital improvements to its network.

Revenue was up 3% at $6.09 billion — just behind the $6.14 billion that analysts had predicted.

Union Pacific’s expenses declined 2% to $3.68 billion as its fuel costs dropped 13% in the quarter with inflation easing.

Union Pacific is one of the nation’s largest railroads with tracks crossing 23 western states.