Ratings reflect the favorable risk characteristics of the U.S. freight railroad industry, Union Pacific Corp.'s strong competitive position within the industry, and the company's moderate financial policies. Union Pacific operates a large rail network, which covers 23 states across the western U.S. It has a well-diversified traffic base, consisting of energy (largely coal, 23% of revenues); industrial products (19%); intermodal (18%); chemicals (15%); agricultural products (14%); and automotive (11%). It also operates a trucking subsidiary, which accounts for less than 10% of total revenues. Union Pacific has built its current rail system through a series of mergers, the most notable in recent years being the 1996 acquisition of Southern Pacific, which followed the 1995 acquisition of Chicago and North Western
