Union Pacific 2009 Annual Report Download - page 30

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30
Energy – Lower volume and fuel
surcharges reduced freight revenue from
energy shipments in 2009 versus 2008.
Price increases partially offset these
declines. Shipments from the Southern
Powder River Basin of Wyoming (SPRB)
and the Colorado and Utah mines
decreased 14% and 25%, respectively, in
2009 compared to 2008. Continued
economic weakness and high coal
inventories resulted in reduced demand at
our utility customers, resulting in lower
volumes. Production problems at the
Colorado and Utah mines and the loss of
SPRB customer contracts also contributed
to the volume declines.
Price increases, fuel surcharges, and higher volume produced revenue growth in 2008 versus 2007.
Shipments from the SPRB were up 5% compared to 2007 despite mine flooding and network
interruptions caused by extensive flooding in the Midwest in June of 2008. Conversely, shipments from
the Colorado and Utah mines were down 4% in 2008 versus 2007, due to mine production problems.
Industrial Products – Reduced volume
and fuel surcharges resulted in lower
freight revenue from industrial products
shipments in 2009 versus 2008. Price
improvements partially offset these
declines. Weak demand and inventory
reductions resulting from the economic
downturn drove a 53% decline in steel
shipments in 2009 compared to 2008.
The continued weakness in the housing
market reduced lumber shipments, while
surplus production and overall market
uncertainty resulted in lower paper and
newsprint shipments in 2009 versus 2008.
In addition, cement and stone shipments
declined during the year due to high inventories and weak commercial and residential construction
activity.
Price improvements and fuel surcharges contributed to higher freight revenue in 2008 compared to 2007.
Lower volume partially offset these increases. Continued softening of the housing market and weak
market conditions resulted in lower lumber shipments. In addition, cement and stone shipments declined
due to a weak overall residential and commercial construction market. Business interruptions resulting
from the hurricanes also reduced various construction-related shipments, primarily stone. Conversely, we
shipped more steel in 2008 than in 2007 as the weak dollar increased the cost of steel imports during most
of the year, creating a strong demand for domestic steel.
2009 Energy Revenue
2009 Industrial Products Revenue
SPRB
72%
Colorado/
Utah
20%
Other
8%
Lumber
16%
Other
10%
Metals
21%
Minerals &
Consumer
20%
Paper
16%
Construction
Products
17%