Union Pacific 2011 Annual Report Download - page 29

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29
Intermodal – Fuel surcharge gains, including better
contract provisions for fuel cost recovery, and pricing
improvements, partially offset by lower volume,
increased freight revenue from intermodal shipments
in 2011 compared to 2010. Volume from international
traffic decreased 5% in 2011 versus 2010, driven by
softer economic conditions, reflected in a muted
international peak shipping season, which usually
starts in the third quarter, and the loss of a customer
contract. Conversely, conversions from truck to rail
and recovering consumer demand offset competition
for domestic shipments, resulting in a 2% volume
increase in domestic shipments during 2011.
Increased volume, higher fuel surcharges (including new recovery provisions in contracts renegotiated in
2010), and pricing gains drove the increase in freight revenue from intermodal shipments in 2010
compared to 2009. Domestic and international traffic increased from 2009 levels, reflecting improvements
in economic conditions. International volumes grew in response to continued inventory restocking and
higher consumer demand. Domestic shipments increased as a result of conversions from truck to rail
fueled by improved service. A new contract with Hub Group, Inc., which included additional shipments,
was executed in the second quarter of 2009 and contributed to the increase in domestic shipments.
Mexico Business – Each of our commodity groups includes revenue from shipments to and from Mexico.
Revenue from Mexico business increased 16% to $1.8 billion in 2011 versus 2010. Volume levels
increased 9% in aggregate versus 2010, with particularly strong growth in automotive and industrial
products. Energy was the one commodity group that declined as one of our customers conducted a
supplier contract renewal during the year, shifting transportation modes from rail to truck during the
process.
Revenue from Mexico business increased 30% in 2010 versus 2009 to $1.6 billion. Volume levels for all
six commodity groups increased, up 25% in aggregate versus 2009, with particularly strong growth in
automotive, industrial products, and intermodal shipments.
2011 Intermodal Revenue