The company stood by its forecast for higher full-year profit amid a slowly mending economy.
"Coal inventory levels are up and the burn rate is down," Chief Financial Officer Rob Knight said on Tuesday at JPMorgan's Aviation, Transportation and Defense conference. His comments were Webcast.
"What will change that glide path are summer conditions," if utility customers need to use more coal to produce electricity to run air conditioners, he said.
For now, utility customers' coal inventories are averaging 75-day stockpiles, he said, compared with an optimal level of about 60 days.
While Union Pacific's coal volumes are headed lower, its chemicals shipments are expected to be up 9 to 10 percent in the first quarter, Knight said. Overall shipping volumes are up 2 percent so far this year, he said.
"We've also been able to run a very efficient operation, and got started on some capital work that in harsher winter conditions would have been harder," he said.
Knight declined to project price - or shipping fee - increases after the 4.5 percent rise in 2011.
But he said first-quarter pricing will start reflecting just under $1 billion of legacy contracts -- older contracts -- that were renewed at higher prices in the 2011 fourth quarter and earlier in the current quarter.
Another $950 million of legacy contracts remain to be renegotiated through 2015, with 85 percent of that in the coal business.
Union Pacific reported record earnings in 2011, with total volume up 3 percent, and has forecast record results for this year as the economy gradually improves.
The largest publicly held U.S. railroad announced on March 12 that Chief Executive James Young was taking a leave of absence for treatment of pancreatic cancer and that company veteran John Koraleski would step in as acting president and CEO. (Reuters)
