Union Pacific reported record third-quarter revenue and profits as higher volume, pricing, and efficiency gains more than offset the impact of rising fuel prices and inflation.

“Union Pacific’s third-quarter results demonstrate our ability to safely deliver the service we sold our customers while efficiently handling 6% volume growth,” Chief Executive Jim Vena said on the railroad’s (NYSE: UNP) earnings call today.

Operating income increased 15%, to $2.94 billion, as revenue grew 15%, to $7.19 billion. Earnings per share rose 16%, to $3.49.

The railroad’s operating ratio was 59.1%, a 0.1-point improvement compared to a year ago. Workforce productivity, measured by car-miles per employee, improved 5%.

Overall volume was up 6% for the quarter. Premium volume — which includes intermodal and automotive traffic — was up 9%. Industrial products traffic grew 6% in the quarter, while bulk volume was flat.

“Domestic intermodal delivered its fifth consecutive record quarter in both volume and revenue. Our foundation of service combined with strong business development and the deployment of buffer resources enabled 13% volume growth,” said Kenny Rocker, executive vice president of marketing and sales. “International intermodal volumes improved 8% versus last year driven by strong West Coast import volumes and business wins.”

The carrier offered a positive outlook for fourth-quarter volume, as high fuel prices and tight truck capacity will continue to drive conversions of truckload freight to rail. The lone exception is coal volume, which will remain under pressure due to low natural gas prices and high utility stockpiles.

Rocker expects a third straight year of record domestic intermodal volume.

Overall volume growth prompted UP to shift some capital spending planned for next year into this year. UP now expects to spend $3.5 billion on capital projects this year, up from $3.3 billion.

UP’s key operational metrics improved slightly compared to last year, with car miles per day up 1%, average train speed flat, and terminal dwell down by 2%. Train length grew 2%, to an average of 9,969 feet.

“Operating discipline and consistent execution of the fundamentals drove another quarter of record workforce productivity, record train length, and record fuel consumption,” said Eric Gehringer, executive vice president of operations.

The railroad said its employee personal injury and train accident rates improved compared to the three-year rolling average but did not provide specifics.

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