Union Pacific 2007 Annual Report Download - page 8

4
OPERATIONS
The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although
revenue is analyzed by commodity group, we analyze the net financial results of the Railroad as one segment
due to the integrated nature of our rail network. Additional information regarding our business and
operations, including revenue and financial information and data and other information regarding
environmental matters, 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.
Operations – UPRR is a Class I railroad operating in
the United States. We have 32,205 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. Our 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 our premium business. In 2007, we generated commodity revenue totaling $15.5 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 17% of our 2007 commodity revenue. With access to most
major grain markets, we provide 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. We also serve 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 and our Produce Unit Train, our premium perishables services that move fruits
and vegetables from the PNW and California with priority service to destinations in the East, compete 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 – We are 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. We off-load
finished vehicles at 38 vehicle distribution centers for delivery by truck to all major western U.S. cities. In
addition to transporting finished vehicles, we provide expedited handling of automotive parts in both boxcars
and intermodal containers to several assembly plants. We carry automotive materials bound for assembly
plants in Mexico, the U.S., and Canada, and we also transport finished vehicles from manufacturing facilities
in Mexico. In 2007, transportation of finished vehicles and automotive materials accounted for 9% of our
commodity revenue.
Chemicals – Transporting chemicals provided 15% of our commodity revenue in 2007. Our franchise enables
us to serve the chemical producing areas along the Gulf Coast, as well as the Rocky Mountain region. Two-