Ratings on Union Pacific Corp. reflect the favorable risk characteristics of the U.S. freight railroad industry, its strong competitive position within the industry, and the company's moderate financial policies. Offsetting these strengths, to some extent, is price competition from other railroads and trucking companies in selected commodity areas, the capital intensity of the industry and current operating pressures, which Standard & Poor's views as temporary in nature. 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, 22% of 2003 revenues); industrial products (20%); intermodal (19%); chemicals (14%); agricultural products (14%); and automotive (11%). Union Pacific has built its current rail system through a
