Union Pacific 2012 Annual Report Download - page 27

Download and view the complete annual report

Please find page 27 of the 2012 Union Pacific annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 101

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101

27
Volume gains, fuel surcharges and price improvements increased freight revenue from chemicals in 2011
versus 2010. In mid-2010, we began moving crude oil shipments from the Bakken formation in North
Dakota to facilities in Louisiana. This new business, along with shipments from the Eagle Ford shale
formation in south Texas, contributed to a 37% increase in shipments of petroleum products during 2011.
Strong domestic demand and robust spring planting increased fertilizer shipments by 9% versus 2010.
Additionally, improving market conditions increased demand for industrial chemicals during 2011, driving
volume levels up versus 2010.
Coal – Lower volume, partially offset by core
pricing gains and fuel surcharge recoveries
reduced freight revenue from coal shipments in
2012 compared to 2011. Shipments of coal from
the Southern Powder River Basin (SPRB) mines
decreased 15% from 2011. Above average coal
stockpiles due to an unseasonably warm winter
and low natural gas prices, which caused some
displacement of coal in electricity production,
led to the volume declines. In addition, the loss
of two contracts to a competitor contributed to
lower volumes from the SPRB. Coal shipments
from the Colorado and Utah mines increased
2% versus 2011. Increased export shipments of
Colorado and Utah coal in 2012 offset the
domestic declines due to higher stockpiles and
low natural gas prices.
Core pricing gains, higher fuel surcharges, and increased volume grew coal freight revenue in 2011
versus 2010 levels. Shipments of coal from the SPRB were up 5% in 2011 compared to 2010, reflecting
new business to Wisconsin facilities and the start-up of a new power plant near Waco, Texas.
Completion of a year-long equipment relocation process at one of the mines in the third quarter of 2011
and minimal production problems elsewhere improved shipments from Colorado and Utah by 3% in 2011
versus 2010. These gains, along with increased exports to Europe and Asia, offset first half production
problems and weak demand from eastern coal utilities.
Industrial Products – Core pricing improvement,
higher volume and additional fuel surcharges
increased freight revenue from industrial
products in 2012 versus 2011. Shipments of
non-metallic minerals (primarily frac sand), grew
in response to increased horizontal drilling
activity for energy products. More construction
activity during a relatively mild winter led to
higher demand for shipments of lumber, cement
and stone compared to 2011. The growth in
housing starts throughout 2012 also increased
lumber shipments, up 12% from 2011. Steel
shipments finished slightly down from 2011
levels as lower demand for export scrap and
mine production issues in the second half of the
year offset increases in the first half due to
higher demand for steel coils and plate for pipe
and auto production.
Increased volume, fuel surcharges, and core pricing improvement increased freight revenue from
industrial products in 2011 versus 2010. Shipments of non-metallic minerals (primarily frac sand) grew in
response to a dramatic rise in horizontal drilling activity for natural gas and oil, while steel shipments
increased due to higher demand for steel coils and plate for automotive and pipe production. In addition,
an increase in iron ore export business to China also drove volume growth. Conversely, lower
commercial construction activity reduced stone, sand and gravel shipments in 2011 compared to 2010.
2012 Coal Carloads
2012 Industrial Products Carloads