Union Pacific 2011 Annual Report Download - page 6

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Operations – UPRR is a Class I railroad
operating in the U.S. We have 31,898 route
miles, linking Pacific Coast and Gulf Coast
ports with the Midwest and eastern U.S.
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, food and chemicals. The transportation of finished vehicles,
intermodal containers and truck trailers is part of our premium business. In 2011, we generated freight
revenues totaling $18.5 billion from the following six commodity groups:
Agricultural – Transportation of grains, commodities produced from these grains, and food and beverage
products generated 18% of the Railroad’s 2011 freight revenue. The Company accesses most major
grain markets, linking the Midwest and western producing areas to export terminals in the Pacific
Northwest and Gulf Coast ports, as well as Mexico. We also serve significant domestic markets, including
grain processors, animal feeders and ethanol producers in the Midwest, West, South and Rocky
Mountain states. Unit trains, which transport a single commodity between producers and export terminals
or domestic markets, represent nearly 40% of agricultural shipments.
Automotive – We are the largest automotive carrier west of the Mississippi River and operate or access
over 40 vehicle distribution centers. The Railroad’s extensive franchise serves vehicle assembly plants
and connects to West Coast ports and the Port of Houston to accommodate both import and export
shipments. In addition to transporting finished vehicles, UP provides expedited handling of automotive
parts in both boxcars and intermodal containers destined for Mexico, the U.S. and Canada. The
automotive group generated 8% of Union Pacific’s freight revenue in 2011. Finished vehicles accounted
for 78% of this revenue, with transportation of automotive parts and materials providing the remaining
22%.
Chemicals – Transporting chemicals generated 15% of our freight revenue in 2011. The Railroad’s
unique franchise serves the chemical producing areas along the Gulf Coast, where roughly two-thirds of
the Company’s chemical business originates, terminates or travels. Our chemical franchise also accesses
chemical producers in the Rocky Mountains and on the West Coast. The Company’s chemical shipments
include three broad categories: Petrochemicals, Fertilizer and Soda Ash. Petrochemicals include
industrial chemicals, plastics, petroleum products, including crude oil from North Dakota, and liquid
petroleum gases. These products move primarily to and from the Gulf Coast region. Fertilizer movements
originate in the Gulf Coast region, the western part of the U.S. and Canada for delivery to major
agricultural users in the Midwest, western U.S. and abroad. Soda ash originates in southwestern
Wyoming and California, destined for chemical and glass producing markets in North America and
abroad.
Energy – Coal and petroleum coke transportation accounted for the largest share of our freight revenue,
22% in 2011. The Railroad’s network supports the transportation of coal and petroleum coke to utilities
and industrial facilities throughout the U.S. Through interchange gateways and ports, UP’s reach extends
to eastern U.S. utilities, Mexico, Europe and Asia. Water terminals allow the Railroad to move western
U.S. coal east via the Mississippi and Ohio Rivers, as well as the Great Lakes. Export coal moves through
West Coast ports to Asia and through Mississippi River and Gulf Coast terminals to Europe. Coal traffic
originating in the Southern Powder River Basin (SPRB) area of Wyoming is the largest segment of UP’s
energy business.
Industrial Products – Our extensive network facilitates the movement of numerous commodities between
thousands of origin and destination points throughout North America. The Industrial Products commodity
group consists of several categories, including construction products, metals, minerals, paper, consumer
2011 Freight Revenue