WEBVTT

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So lance you have your earnings out. Take us

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through Q two earnings. A little disappointing how much

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of that? Because some softening in consumer David,

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it was a tough quarter and you pointed out correctly

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that the consumer slowdown in goods spending showed up on

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our top line. We had 2% lower volume,

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5% lower revenue. And then we also saw some

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inflationary headwinds and some one time items flow through our

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labor and compensation. Did it surprise you or did

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you see it coming? Well, we saw the

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inflation coming and you know, in our business,

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given the nature of our contracts, our commercial relationships

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. It takes a little while to recoup all of

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that inflation through pricing. The part that we didn't

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know exactly the timing of was the agreement that we

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achieved with the smart TD union on brake persons that

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cost us$67 million in the quarter, but it's

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going to have a two year payback. So the

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big news out of this with respect is not the

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earning so much, but your future personally, you're

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going to be stepping down as chair and CEO of

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Union Pacific. First of all, why now,

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why is this the right time? Well, I

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had started the conversation with our board at least a

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year and a half ago, targeting the front end

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of 2024 or the back end of 2023 as the

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right time for the board and I to be able

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to make the decision on my retirement. So we've

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been working on it for quite some time. We

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accelerated that work at the beginning of this year.

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And I'm just so proud of the work that the

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board did a very thorough and exhaustive search. And

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they ended up picking what is a fabulous person for

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our CEO, a very well experienced railroad operator.

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We have some experience with him. So he's rejoining

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the team. I couldn't be happier. So it

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is time, at least getting towards time to look

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back on your tenure there as you look back on

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that. What are you proudest of? What do

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you think is your legacy that you feel that you

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will leave behind you? Well, David in the

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8.5 years, I've been very fortunate and honored to

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leave this company. I'm really proud of the work

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that we've done building the team. I've got the

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best team in the railroad industry. I'm proud of

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the work that we've done on sustainability, on diversity

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, equity and inclusion. My board reflects that and

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I'm also proud of the fact that we created value

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for our shareholders. All through those 8.5 years.

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So it's been a heck of a run and I

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couldn't be more proud of my team. What do

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you expect next for you in Pacific after you've left

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? What are the things that are left to be

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done that you didn't quite get done? Yeah.

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One thing that I should grind about is the consistency

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and reliability of our service product over those 8.5,

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9 years could have been better as we look into

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the future. Our strategy is called serve, grow

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win together and serve is building the foundation for consistent

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and reliable service that generates growth. And David,

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you know, we talk about the three legged stool

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that creates long term value for all of our stakeholders

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, pricing productivity and growth and the growth is enabled

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by excellent consistent reliable service. That's what we have

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to focus attention on. L let's talk about the

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role technology has played and will play going into the

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future to achieve productivity as well as growth. A

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couple of years ago, we added Rahul Jalali as

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our cio and I couldn't be happy with that addition

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to the team because technology is a big deal for

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us. Technology is an unlock when it comes to

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asset utilization when it comes to the efficiency of our

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operation. When it comes to safety, things like

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wayside detection and evaluating the data that we get from

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wayside detectors looking for a that's on the way to

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failure and replacing it before failure. And it also

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is going to be critically important as we align resources

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with demand. There's a big role for technology there

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and then there's a big role for technology in how

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our employees show up at work and how they are

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scheduled for work. You know, we reached just

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a historic agreement with our engineers on the transportation craft

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for work rest schedule and technology is going to play

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a role in being able to implement that effectively.

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That's a life changer for those employees. Lance you

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mentioned, sustainability is one of your goals, one

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of the things you feel you've made progress on and

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you and I have talked in the past about the

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fact that using the rails is often is the more

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sustainable alternative in terms of emissions. Where are we

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going in the future? Can we get to zero

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emissions coming out of railroads? Yeah, we're shooting

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for that in 2050. You know, we're the

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first railroad with hard sti targets that have a threshold

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for us to reach in 2030 with a night towards

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carbon neutral by 2050 early on David. That's a

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lot about renewable fuels, bio diesel. It's also

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about reducing the amount of fuel that we consume in

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a more efficient sea rate. We had a great

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month of June in our sea rate and then it's

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also about making sure that we're looking for ways to

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reduce the emissions on scope two and three by 2030

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. Our existing commitment is a 26% absolute reduction.

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And I'm pretty confident that's going up because we've also

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been working with BT to re evaluate our commitments given

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that we're trying to be below 1.5°C warming by

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2050 Lance. We've always enjoyed being able to talk

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to you about Union Pacific and about what you're doing

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, Union Pacific. And one of the reasons for

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that frankly is you have a window on the economy

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right now. Take a step back from where you

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sit at Union Pacific right now. What can you

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tell us about where the economy is and where it's

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going? Yeah. So, so our, our

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quarterly results were kind of a little bit of a

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microcosm into the answer to your question. There were

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parts of the economy that we serve that are doing

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quite well. The recovery and supply chain for automotive

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makes, finished vehicles and auto parts, vehicle parts

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that business is up, construction is up. And

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I think that's both reflective of the promise of the

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Infrastructure Act but also the existing demand for infrastructure at

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state level. So that's been real powerful and strong

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. We saw some increase in things like metals and

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minerals which feed a fair amount of the economy.

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But we saw weakness in the consumer oriented parts of

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the economy, lumber for housing, brown paper for

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packaged goods, intermodal, domestic intermodal and international intermodal

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on the shipment of consumer goods into retail distribution as

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we look into the future. The best thing about

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Union Pacific is our franchise and our people that run

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that franchise and the fact that we touch a lot

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of the economy, I suspect over some period of

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time, consumers are going to settle back down and

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then start growing again in their consumption of goods.

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I think the housing market needs to pick up just

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to satisfy demand for housing. And I also think

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that the industrial economy is poised for America to be

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the most competitive environment globally for production. We've seen

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that in a sweeping increase in direct investment in the

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United States. And I think that's going to translate

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into a really strong industrial manufacturing economy. That's good

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news for us into the future.