REPORTING its 2006 results on January 25, Union Pacific announced its best year ever’, with commodity revenues up by 15% to an all-time record of $14?9bn for the year. Operating income in the fourth quarter grew by 52% to nearly $810m. President & CEO Jim Young - who succeeded Dick Davidson as UP Chairman on February 1 - said it was ’a strong finish to a record year’. UP’s operating ratio for Q4 improved to 79?6, compared to 85?3 a year earlier. Taking 2006 as a whole, UP saw a 3% increase in carload volumes to 9?9 million, whilst operating income jumped by 61% from $1?8bn to $2?9bn. The operating ratio for the year was 81?5, compared to 86?8 in 2005. Reflecting these results, the UP board voted on January 30 to increase the quarterly dividend by 17% to $0?35 per share and launch a three-year programme to buy back up to 20 million of the company’s 270 million shares. We are committed to enhancing shareholder value as we continue to improve the overall returns on our business’, said Young. One factor driving UP’s strong performance has been the continuing flood of imports pouring into the USA from the Far East. Another has been the industry policy of passing on higher fuel prices to shippers - UP’s average fuel price in 2006 was $0?54/litre compared to $0?48 the previous year, although it fell back to $0?51 in Q4. However, on January 26 the Surface Transportation Board issued new rules on fuel surcharges and imposed mandatory reporting requirements on all Class Is. STB Chairman Charles D Nottingham said this would ’remove the possibility that railroads will view fuel surcharges as a profit centre’. n