(Reuters) - Union Pacific Corp UNP.N shares rose more than 2% on Thursday after executives at the railroad operator said the U.S.-China trade pact should help reverse slumping volumes in the second half of 2020.

FILE PHOTO: A Union Pacific rail car is parked at a Burlington National Santa Fe (BNSF) train yard in Seattle, Washington, U.S., February 10, 2017. REUTERS/Chris Helgren

Shares were up 2.4% to $185.27 in midday trade after executives forecast a slight uptick in 2020 volumes.

U.S. President Donald Trump and Chinese Vice Premier Liu last week signed a Phase 1 trade agreement that begins to unwind their 18-month-long trade war.

“It turns a headwind into a tailwind,” Union Pacific Chief Executive Officer Lance Fritz said of the partial cease fire that will cut some U.S. tariffs on Chinese goods in exchange for Chinese pledges to buy significantly more American farm, energy and manufactured goods.

“If half of that comes through, it’s substantial,” Fritz said of the proposed Chinese purchases.

Trump’s tariff tiffs with China and other nations dented everything from soybean to steel shipments at a time when railroads were already grappling with competition from long-haul truckers and falling demand for coal.

Union Pacific’s volume fell every quarter in 2019, capped by an 11% drop in the latest quarter that was driven by declines in coal and sand, grains and fertilizer, and finished vehicles.

Oil shipments rose, bolstered by lower crude prices during the latest quarter, and executives said that trend should continue during 2020. Union Pacific expects agricultural shipments - which were hard hit by the China trade war - to recover.

The Omaha-based railroad’s fourth quarter operating ratio, a measure of operating expenses as a percentage of revenue and a key metric for Wall Street, fell 1.9 points to 59.7% from the year earlier period after it cut jobs and idled locomotives.

A lower ratio means higher profitability for railroads.

Net income fell 9.7% to $1.40 billion, or $2.02 per share, from $1.55 billion.

Total operating revenue fell 9.5% to $5.21 billion

Analysts on average expected a quarterly profit of $2.04 per share and revenue of $5.22 billion, according to IBES data from Refinitiv.

Union Pacific and Berkshire Hathaway-owned BRKa.N BNSF are the largest U.S. freight rail operators with annual revenues of more than $20 billion each.