Building upon our momentum to start the year, our team delivered another record-setting quarter, as dramatic improvement in both revenue and volume up 34% and 25% respectively outpaced an 11% growth in expense and while the year-over-year improvement is aided by easier comps from last year's economic shut down, our performance in the quarter also improved sequentially in a number of ways as shown on slide 4.
Our results includes second quarter records for net income and earnings per share and all-time records for operating income and operating ratio, which was 58.3% this quarter.
Our operating discipline enabled us to handle a 25% year-over-year volume increase with 8% fewer people in our workforce and a 1% decrease in active locomotives.
So far, we have reduced the cost-per-yard in local crude 7% versus last year and expect additional progress as the year continues.
We continue to empower our workforce to the delivery of mobility solutions and have distributed 8,000 smartphones to our T&E employees to facilitate improved reporting and to streamline the process of keeping trains moving.
That started a virtuous cycle of improved reliability with 175% improvement in the days between unscheduled events to a shop versus pre-PSR levels, meaning that when units do go into the shop our craftsman can spend more time on preventive maintenance instead of triaging issues.
As a result, second quarter revenue in our non-energy markets exceeded pre-pandemic levels by 4%.
Our market position enabled a quick recovery and consumer and industrial markets almost fully offsetting the 50% decline in our energy revenue, despite the sharp decrease in this historically profitable segment, we reduced operating ratio, levering the strength of our unique franchise to target segments of the $800 billion truck and logistics markets with a sharp focus on productivity.
Total revenue for the quarter was $2.8 billion, up 34% year-over-year on 25% volume improvement.
Rising fuel prices and price gains drove a 7% improvement in revenue per unit, led by our intermodal franchise, which delivered record-breaking revenue per unit and revenue per unit less fuel.
Beginning with our merchandise segment, both volume and revenue improved 25% versus the second quarter of 2020 driven primarily by recovery from COVID-19 related shutdowns in the prior period.
While automotive continued to face headwinds associated with the semiconductor chip shortage, shipments in the second quarter were up 122% year-over-year against easy comps associated with near complete shutdown of vehicle production in the second quarter of last year.
Our steel franchise also delivered strong growth this quarter, up 67% as record level steel prices and elevated demand fuel production activity.
Combined gains in automotive and steel volume represented roughly 63% of total merchandise growth for the quarter.
Domestic shipments were up 17% year-over-year in the second quarter and up 4% from the same period in 2019.
International shipments were also strong in the second quarter improving 26% year-over-year on sustained high import demand but were down 3% from the same period in 2019.
Approximately 50% of the revenue per unit gain was driven by higher container storage time on terminal due to supply chain recovery challenges.
Coal shipments improved 55% year-over-year with strength in both the export and utility markets.
We expect the current economic momentum to continue through the end of the year and are raising our guidance for full-year revenue growth to approximately 12% year-over-year.
The overall economy continues to surprise to the upside with forecast for 2021 GDP growth now at around 7% and approximately 5% for 2022.
Industrial production is forecasted to increase 6% in 2021 and north of 3% in 2022.
The operating ratio of 58.3% represents a 1240 basis point improvement.
We had $67 million of property gains in the quarter, of which there was one major transaction that closed at the end of the quarter and resulted in a $55 million gain.
We view this single transaction is incremental to our normal yearly operating property gain guidance of $30 million to $40 million and it alone represents 100 basis points of the operating ratio improvement this quarter.
Earnings per share at $3.28 was $1.75 higher than prior year, aside from the $0.17 goodness from the property gain there was a state tax law change that resulted in a favorable adjustment to our deferred taxes of $0.09.
Moving to Slide 16, Alan walked you through the drivers of the 34% increase in revenues, including the 25% growth in volumes.
At the same time, we contained growth in operating expenses to 11% as we harvested additional benefits from workforce and asset productivity.
The volume growth coupled with the productivity drove strong incremental margins again this quarter resulting in an operating ratio that was a record low 58.3% improving 1240 basis points year-over-year and 320 basis points sequentially versus Q1, including the 200 basis point tailwind from the major property gained.
Our operating income at $1.167 billion in the quarter is another record, up $557 million or 91% year-over-year and we generated free cash flow of $1.47 billion through 6 months also a record, and that represents an increase of $447 million or 44% versus the same 6 months last year.
Moving now to a drill down of operating expense performance on Slide 17, you will see that operating expenses increased $157 million or 11% and fuel was the biggest driver of the increase with price driving expenses up $83 million.
Usage increased due to higher volumes, which was partially offset by another quarter of fuel efficiency gains, a 4% improvement in the quarter.
Comp and Ben is up 6% with savings from headcount being down 8% year-over-year, offsetting increases in pay rates and over time.
Higher incentive compensation in the quarter was $39 million reflecting the improved outlook for the year and lower accrual rates of last year.
The big item in the materials and other column is the favorable compare on gains from property sales, in Q2 and that was $67 million in the quarter versus only $2 million last year.
Turning to Slide 18, you will see that other income net of $35 million is $14 million or 29% unfavorable year-over-year due primarily to lower net returns on our company owned life insurance investments.
Our effective tax rate in the quarter was only 21%, lower than we typically model and that was primarily from the benefit associated with the state tax law change.
Net income increased by 109%, while earnings per share grew 114% supported by the nearly 3.4 million shares we repurchased in the quarter.
Wrapping up now with our free cash flow on Slide 19, and as I mentioned free cash flow was a record for the 6 months of 2021 at $1.47 billion buoyed by very strong operating cash generation and relatively modest property additions of $627 million thus far in the year and that translates to a free cash flow conversion of 99% through 6 months although, we still expect property additions to ramp up in the balance of the year and hit our $1.6 billion guidance number.
Earlier this quarter, we became the first North American Class 1 railroad to issue a green bond, launching 500 million in green bonds to fund sustainable investments to reduce our carbon emissions and partner with customers to do the same.
Our commitment to reduce emissions intensity by 42% in the next 15 years.
As Alan mentioned, we are even more confident about growth for the balance of this year and we now expect revenue to be up approximately 12% year-over-year.
We are also succeeding in driving productivity into our operations and as a result we got onto our 60% run rate here in the second quarter.
We expect to maintain this OR level for the balance of the year, which translates to at least 400 basis points of OR improvement for the full year versus our adjusted 2020 result, and we'll build upon this momentum for more improvements in 2022 and long-term sustained value for our shareholders and customers.

Summary:
Our results includes second quarter records for net income and earnings per share and all-time records for operating income and operating ratio, which was 58.3% this quarter.
Total revenue for the quarter was $2.8 billion, up 34% year-over-year on 25% volume improvement.
The operating ratio of 58.3% represents a 1240 basis point improvement.
Earnings per share at $3.28 was $1.75 higher than prior year, aside from the $0.17 goodness from the property gain there was a state tax law change that resulted in a favorable adjustment to our deferred taxes of $0.09.
The volume growth coupled with the productivity drove strong incremental margins again this quarter resulting in an operating ratio that was a record low 58.3% improving 1240 basis points year-over-year and 320 basis points sequentially versus Q1, including the 200 basis point tailwind from the major property gained.