Union Pacific 2012 Annual Report Download - page 26

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26
Agricultural Products – Lower volume more
than offset core pricing gains and increased fuel
surcharges as agricultural freight revenue
decreased in 2012 versus 2011. Weak export
demand for U.S. wheat drove a 19% decrease
in wheat shipments year over year, as the
foreign wheat market improved significantly
from the weather affected crop in 2011. In
addition, corn shipments declined 11% for the
year, with more significant declines in the fourth
quarter, reflecting the impact of the severe
drought across the U.S. Lower gasoline
demand, reduced exports and higher corn
prices decreased ethanol shipments during the
second half of the year. Growth in imported
beer from Mexico and a strong domestic harvest of fresh potatoes partially offset these declines.
Fuel surcharges, price improvements and modest volume growth increased agricultural freight revenue in
2011 versus 2010. The federal mandate for higher levels of ethanol in the nation’s fuel supply and new
business increased shipments of ethanol by 10% in 2011 versus 2010. Strong export demand for U.S.
wheat via Gulf ports in the first half of 2011 was the primary driver of a 6% increase in wheat and food
grains shipments for 2011 compared to 2010, despite a 19% decrease in shipments in the second half of
2011 when U.S. grain exports declined. Poor wheat production in some foreign markets drove the export
demand during the first six months of the year.
Automotive – Increased shipments of finished
vehicles and automotive parts along with core
pricing gains and higher fuel surcharges
improved automotive freight revenue from 2011
levels. Higher production and sales levels drove
the volume growth. In addition, 2012 shipments
compared favorably to 2011 due to lower
shipments of international vehicles in 2011
following the disaster in Japan.
Higher volume, core pricing gains and fuel
surcharges improved automotive freight revenue
in 2011, from 2010 levels. Although higher
production and sales levels during 2011
contributed to volume growth, the disaster in
Japan partially offset the increase in shipments.
The disruption caused by this event reduced parts shipments in the second quarter and shipments of
international vehicles in the second and third quarters. Finished autos shipments were up 7% in 2011
from 2010, aided by a 14% increase in the fourth quarter as the U.S. light-vehicle sales rate was the
highest since the second quarter of 2008.
Chemicals – Higher volume, core price
improvements and fuel surcharges increased
freight revenue from chemicals in 2012.
Shipments of crude oil primarily from the
Bakken, Permian and Eagle Ford Shale
formations to the Gulf area increased over three
fold, driving the improvement in chemicals
shipments. In addition, plastics and industrial
chemicals shipments increased as low natural
gas prices have made U.S. chemicals more
cost competitive globally. Declines in potash
due to temporary shutdowns and reduced
production at several mines partially offset the
increases in chemical shipments during the
year.
2012 Agricultural Carloads
2012 Automotive Carloads
2012 Chemicals Carloads