View 2008 Fact Book - Union Pacific
View 2008 Fact Book - Union Pacific View 2008 Fact Book - Union Pacific
Track and Terminal DensityLane density based on carloadingsLine thickness depicts traffi c density2008 Terminal VolumesMajor Classification Yards Average Daily Volume/CarsNorth Platte, Nebraska 2,500North Little Rock, Arkansas 1,600Proviso (Chicago), Illinois 1,500Englewood (Houston), Texas 1,300Fort Worth, Texas 1,300Roseville, California 1,300Livonia, Louisiana 1,200West Colton, California 1,200Pine Bluff, Arkansas 1,200Neff (Kansas City), Missouri 1,000Major Intermodal TerminalsAnnual LiftsICTF (Los Angeles), California 619,000East Los Angeles, California 383,000Marion (Memphis), Tennessee 360,000Global 2 (Chicago), Illinois 299,000Dallas, Texas 294,000Global 1 (Chicago), Illinois 291,000Seattle, Washington 228,000Yard Center (Chicago), Illinois 227,000Oakland, California 222,000Englewood (Houston), Texas 207,00011
Expense InitiativesRailroads are very asset-intensive businesses, so economicdownturns and associated volume declines put effi ciency at theforefront.Cost StructureIn 2008, Union Pacifi c’s operating expenses totaled $13.9 billion,with fuel and compensation comprising more than 60 percent ofthe total. Approximately 30 percent of the total costs are linked toquarterly volume changes. Expenses for train crews, locomotivefuel and some short-term equipment costs fl uctuate directlywith business levels. In addition, changes in fuel prices impactexpenses, especially since the Railroad does not recover 100percent of its annual fuel costs through surcharges and other costrecovery mechanisms.The Company’s costs that vary with volume increase toapproximately 50 percent of the total over a period of severalquarters. However, the key to expanding from 30 to 50 percent isvisibility with respect to future business levels. In an environmentof sustained lower volumes, the Railroad requires less mechanicaland engineering work, equipment and staff. Longer-term, over anumber of years, costs can be even more variable as the businessis sized to match volume levels.Resource ManagementUP’s resources must be adequate to meet volume demand. In2004, the Company experienced more demand than capacity.Today the other extreme is seen - excess capacity. Although thefi xed network is sized to handle roughly 200,000 weekly carloads,fi rst quarter 2009 demand levels resulted in approximately146,000 weekly carloads.As volumes remain soft, the Company is acting aggressively toalign its resources with current demand levels by furloughingemployees and storing locomotives and freight cars. These idleresources position Union Pacifi c to effi ciently handle the volumeswhen freight demand recovers.Management of train operations improved over the past severalyears through continued implementation of the Unifi ed Planto simplify the network. The management of train crews alsochanged. Limiting crew miles and staffi ng “cutback” engineersallows more trains to run with the existing crew base, and providesextra personnel trained as engineers to be available for immediateuse as volumes increase.Ongoing cost reduction action must be taken while still protectingservice commitments. Excellent service is the key to enteringnew, truck-competitive markets and increasing the value of railtransportation for customers.2008 Operating ExpensesCompensation& Benefits32%Fuel 29%PurchasedServices& Material14%Equipment Rents9%Depreciation10%Other6%Short-Term Variable(30% of Expenses)- Train Crews- Locomotive Fuel- Equipment RentsLong-Term Variable(Increases to 50%)- Mechanical &Engineering Expense- Equipment Rents- Workforce LevelsProject Operating RatioProject Operating Ratio (Project OR) is part of Union Pacifi c’songoing effi ciency improvement efforts. This corporate-wideinitiative seeks to increase effi ciency, effectiveness and safety.Project OR is helping the Railroad manage through the currenteconomic challenges, while positioning it for the long term.Union Pacifi c employees use the principles of Project OR tofocus on driving higher returns. Employees are making changes toimprove overall effi ciency and effectiveness, and these changesare expected to yield benefi ts for the Company now and in thefuture.12
- Page 4: Company OverviewUnion Pacifi c Corp
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Track and Terminal DensityLane density based on carloadingsLine thickness depicts traffi c density<strong>2008</strong> Terminal VolumesMajor Classification Yards Average Daily Volume/CarsNorth Platte, Nebraska 2,500North Little Rock, Arkansas 1,600Proviso (Chicago), Illinois 1,500Englewood (Houston), Texas 1,300Fort Worth, Texas 1,300Roseville, California 1,300Livonia, Louisiana 1,200West Colton, California 1,200Pine Bluff, Arkansas 1,200Neff (Kansas City), Missouri 1,000Major Intermodal TerminalsAnnual LiftsICTF (Los Angeles), California 619,000East Los Angeles, California 383,000Marion (Memphis), Tennessee 360,000Global 2 (Chicago), Illinois 299,000Dallas, Texas 294,000Global 1 (Chicago), Illinois 291,000Seattle, Washington 228,000Yard Center (Chicago), Illinois 227,000Oakland, California 222,000Englewood (Houston), Texas 207,00011
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