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, are price competition from other railroads and trucking companies in selected commodity areas, the capital intensity of the industry, and current network inefficiencies and operating challenges. 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, 21% of revenues); industrial products (21%); intermodal (19%); chemicals (15%); agricultural products (14%); and automotive (11%). Union Pacific has built its current rail system through a series of mergers, the most notable in
