Union Pacific 2001 Annual Report Download - page 30

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4
Rail
Operations – The Railroad is a Class I railroad that operates in the United States. It has over 33,000 route miles linking
Pacific Coast and Gulf Coast ports to the Midwest and eastern United States gateways and providing several north/south
corridors to key Mexican gateways. The Railroad serves the western two-thirds of the country and maintains coordinated
schedules with other carriers for the handling of freight to and from the Atlantic Coast, the Pacific Coast, the Southeast,
the Southwest, Canada and Mexico. Export and import traffic is moved through Gulf Coast and Pacific Coast ports and
across the Mexican and Canadian borders. Railroad freight is comprised of six commodity lines: agricultural, automotive,
chemicals, energy, industrial products and intermodal. The Railroad continues to focus on utilization of its capital asset
base to meet current operating needs and to introduce innovative rail services across every commodity line.
The Railroad is subject to price and service competition from other railroads, motor carriers and barge operators. The
Railroad's main competitor is Burlington Northern Santa Fe Corporation. Its rail subsidiary, The Burlington Northern
and Santa Fe Railway Company (BNSF), operates parallel routes in many of the Railroad's main traffic corridors. In
addition, the Railroad's operations are conducted in corridors served by other competing railroads and by motor carriers.
Motor carrier competition is particularly strong for intermodal traffic. Because of the proximity of the Railroad's routes
to major inland and Gulf Coast waterways, barge competition can be particularly pronounced, especially for grain and
bulk commodities.
Employees – Approximately 87% of the Railroad's nearly 48,000 employees are represented by 14 major rail unions.
National negotiations under the Railway Labor Act to revise the national labor agreements for all crafts began in late 1999.
In May 2001, the Brotherhood of Maintenance of Way Employees (BMWE) ratified a five-year agreement, which included
provisions for an annual wage increase (based on the consumer price index) and progressive health and welfare cost
sharing. The health and welfare cost sharing was a milestone as the BMWE is the first union to make significant cost
contributions to their health and welfare plan. Contract discussions with the remaining unions are either in negotiation
or mediation. Also during 2001, much of the operating craft unions' focus was on a proposed merger between the United
Transportation Union and the Brotherhood of Locomotive Engineers (BLE). In a December 2001 re-vote, the BLE
resoundingly rejected the merger. Both operating craft unions have indicated a desire to complete national negotiations.
The Corporation anticipates significant progress in 2002.
Trucking
Operations – The trucking segment includes the operations of Overnite and Motor Cargo. Overnite is a major interstate
trucking company specializing in less-than-truckload (LTL) shipments. Overnite serves all 50 states and portions of
Canada and Mexico through 170 service centers located throughout the United States providing regional, inter-regional
and long haul service. Overnite transports a variety of products including machinery, tobacco, textiles, plastics,
electronics and paper products. Motor Cargo is a western regional LTL carrier that provides comprehensive service
throughout 10 western states. Motor Cargo transports general commodities including consumer goods, packaged
foodstuffs, industrial and electronic equipment and auto parts. Overnite and Motor Cargo experience intense service
and price competition from regional, inter-regional and national LTL carriers and, to a lesser extent, from truckload
carriers, railroads and overnight delivery companies. Major competitors include USFreightways and CNF Inc. Overnite
and Motor Cargo believe they are able to compete effectively in their markets by providing high quality, customized
service at competitive prices.
Employees – Overnite continues to oppose the efforts of the International Brotherhood of Teamsters (Teamsters) to
unionize Overnite service centers. Since the Teamsters began their efforts at Overnite in 1994, Overnite has received 90
petitions for union elections at 66 of its 170 service centers, although there have been only nine elections since August
1997, and Teamsters representation was rejected in seven of those nine elections. Twenty-two service centers,
representing approximately 14% of Overnite’s nearly 13,000 nationwide employee work force, have voted for union
representation, and the Teamsters have been certified and recognized as the bargaining representative for such employees.
Employees at 18 of these 22 locations have filed decertification petitions since 1999. Elections affecting approximately
400 additional employees are unresolved, and there are no elections currently scheduled. Additionally, proceedings are
pending in certain cases where a Teamsters’ local union lost a representation election. To date, Overnite has not entered