Union Pacific 2005 Annual Report Download - page 30

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Industrial Products – Price increases and fuel surcharges
generated revenue growth in 2005. In particular,
lumber shipments contributed to this growth due to
solid pricing gains and fuel surcharges. Revenue from
stone shipments increased revenue from construction
products due to strong construction demand, larger
train sizes, and improved car cycle times. Car cycle time
is defined as the amount of time that a car spends on
our system measured from the origin of the loaded or
empty move until arrival at final destination. Overall
carloads were flat compared to 2004. Partially offsetting
substantial volume growth of stone shipments were
reduced paper moves, primarily newsprint and fiber,
and fewer shipments of government materials, steel,
and cement, resulting from softening markets, cement
shortages in certain markets, and higher inventories.
Price increases and fuel surcharges drove ARC
increases.
Growth in lumber, steel, and non-metallic
minerals led to higher revenue in 2004. Demand for
lumber was driven by higher housing starts and low
interest rates. Steel shipments increased as strong global
demand limited imports and spurred demand for
domestic steel. ARC improved due to price increases,
fuel surcharges, and more high-ARC lumber moves.
Intermodal – Revenue in 2005 improved due to strong
imports, primarily from China and the rest of Asia.
However, business interruptions during the first
quarter of 2005 due to the West Coast storm limited
full year revenue growth. ARC improved due to price
increases, fuel surcharges, and index-based contract
escalators.
Overall economic conditions and an increase in
imports from the Far East improved revenue in 2004.
Fuel surcharges and price increases contributed to
ARC growth.
Mexico Business – Each commodity group discussed above includes revenue from shipments to and from Mexico,
which increased 15% to $1.1 billion in 2005 compared to 2004. Revenue growth resulted primarily from price
increases and fuel surcharges. Carloads were flat versus 2004, as fewer auto parts, energy, and intermodal
shipments offset higher agricultural and industrial shipments.
In 2004, revenue grew 9% to $970 million, resulting from increased volume in the industrial products,
intermodal, chemical, and automotive business groups, particularly cement, newsprint and wood fiber, liquid and
dry chemicals, soda ash, and automotive materials. Revenue generated from agricultural shipments also improved
due to higher wheat exports and beer imports. Lower export shipments of corn and feed grains, as well as reduced
energy carloads, partially offset the increases.
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