Union Pacific (UNP) shares were trading ~8% higher during pre-market trading on January 8 after the company named railroad industry veteran Jim Vena as its new executive vice president and COO. Vena will return to the industry after retiring in June 2016.
Apart from handling daily operations, Vena will lead Union Pacific’s ambitious “Unified Plan 2020” announced in October. Under the plan, the company intends to reduce its operating ratio 60% by 2020 and 55% in the long run. For the third quarter, the company reported an operating ratio of 61.7%—flat compared to the same quarter the previous year.
Lance Fritz, Union Pacific’s chairman, president, and CEO, said, “Unified Plan 2020 combines precision scheduled railroading principles with our own UP Way tools and best practices.”
The precision scheduled railroading principles help railroad companies reduce network complexity and improve operational efficiency. Canadian Pacific Railway (CP) and CSX (CSX) have implemented the same principle, which helped them improve their operating ratios.
Vena is well known in the industry. He was Canadian National Railway’s (CNI) executive vice president and COO for more than four decades. During his tenure at Canadian National Railway, the company had the best safety incident ratio in its history and the best operating ratio (operating expenses as a percentage of revenues) in the North American rail industry (IYT).
Union Pacific hopes that Vena will help the company achieve its ambitious long-term targets in the “Unified Plan 2020.” On Vena’s appointment, Fritz said, “We have been making excellent strides rolling out Unified Plan 2020, and Jim’s vast knowledge of the precision scheduled railroading model brings significant experience and expertise that will enhance the work already underway.”