Union Pacific 2005 Annual Report Download - page 10

integrated nature of the rail network. The Consolidated Financial Statements for 2003 also include our
discontinued trucking operations, consisting of Overnite Transportation Company (OTC) and Motor Cargo
Industries, Inc. (Motor Cargo). We reclassified our trucking segment as a discontinued operation in 2003,
reflecting the disposition of these assets. Additional information regarding our operations is presented in Selected
Financial Data, Item 6; Management’s Discussion and Analysis of Financial Condition and Results of Operations,
Item 7; and the Financial Statements and Supplementary Data, Item 8.
Continuing Operations – UPRR is a Class I railroad
operating in the United States. We have 32,426 route
miles, linking Pacific Coast and Gulf Coast ports with
the Midwest and eastern United States gateways and
providing several corridors to key Mexican gateways.
We serve the western two-thirds of the country and
maintain coordinated schedules with other rail carriers
to move freight to and from the Atlantic Coast, the
Pacific Coast, the Southeast, the Southwest, Canada,
and Mexico. Export and import traffic moves through
Gulf Coast and Pacific Coast ports and across the
Mexican and Canadian borders. UPRR’s freight traffic
consists of bulk, manifest, and premium business. Bulk
traffic is primarily coal, grain, rock, or soda ash in unit
trains - trains transporting a single commodity from
one source to one destination. Manifest traffic is
individual carload or less than train-load business,
including commodities such as lumber, steel, paper,
and food. The transportation of finished vehicles and
intermodal containers is part of the Railroad’s
premium business. In 2005, the Railroad generated
commodity revenue totaling $13 billion from the
following six commodity groups:
Agricultural –Transporting agricultural products, including whole grains, commodities produced from these
grains, and food and beverage products, provided 15% of the Railroad’s 2005 commodity revenue. With access to
most major grain markets, the Railroad provides a critical link between the Midwest and western producing areas
and export terminals in the Pacific Northwest (PNW) and Gulf ports, as well as Mexico. Unit trains of grain
efficiently shuttle between producers and export terminals or domestic markets. UPRR also serves significant
domestic markets, including grain processors, animal feeders, and ethanol producers in the Midwest, West,
South, and Rocky Mountain states. Primary food commodities consist of a variety of fresh and frozen fruits and
vegetables, dairy products, and beverages, which are moved to major U.S. population centers for consumption.
Express Lane, our premium perishables service that moves fruits and vegetables from the PNW and California
with priority service to destinations in the East, competes with the trucking industry. We transport frozen meat
and poultry to the West Coast ports for export, while beverages, primarily beer, enter the U.S. from Mexico.
Automotive –UPRR is the largest automotive carrier west of the Mississippi River, serving seven vehicle assembly
plants and distributing imported vehicles from six West Coast ports and Houston. The Railroad off-loads finished
vehicles at 38 vehicle distribution centers for delivery by truck to all major western U.S. cities. In addition to
transporting finished vehicles, UPRR provides expedited handling of automobile parts in both boxcars and
intermodal containers to several assembly plants, some of which are in Mexico. The Railroad carries automobile
materials bound for assembly plants in Mexico, the U.S., and Canada and transports finished vehicles from
manufacturing facilities in Mexico. In 2005, transportation of finished vehicles and automobile materials
accounted for 10% of the Railroad’s total commodity revenue.
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