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Lance Fritz, chief executive of Union Pacific Corp, said
trans-Pacific volumes overall remain one of the company's softer
areas because of overcapacity issues, but back-to-school related
shipments were showing signs of rebounding.
"Our consumption of goods in the United States and in the world
took a little bit of a pause, and that's how they got into an
overcapacity situation," Fritz told Reuters in an interview on
Wednesday. "It's exhibiting normal seasonality this year, which
is good."
That could augur well for the key back-to-school shopping season
as it shows stores have the confidence to build stock.
Back-to-school is the second-most important selling season for
U.S. retailers after the end-of-year holidays.
Thomson Reuters' Same Store Sales Index, which tracks sales from
stores open at least one year, indicates a 1 percent growth rate
for the third quarter of 2017, which covers the back-to-school
season through August and September.
That would match 2016's back-to-school performance and mark the
strongest showing so far this year, according to Jharonne Martis,
director of consumer research for Thomson Reuters. Same-store
sales fell by 0.1 percent during the first quarter, and are on
pace for a 0.6 percent gain in the second quarter.
About 40 percent of Union Pacific's overall volumes stems from
international trade, Fritz said. About 12 percent of that
relates to Mexico and most of the rest is associated with
trans-Pacific traffic.
Inbound shipping container traffic at the ports of Los Angeles
and Long Beach, the two largest West Coast ports and key hubs
for Union Pacific's international intermodal business, also
point to recovering volumes.
After slumping in February, traffic has built for three
consecutive months. May volumes at Los Angeles were the highest
since January and at Long Beach were the highest since August
2015.
Fritz also said the company's energy-related volumes were also
seeing strength, particularly demand for shipping of hydraulic
fracturing supplies and coal.
(Reporting by Sophia Kunthara; Editing by Dan Burns and Andrew
Hay)
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