Ratings on Union Pacific Corp. reflect favorable risk characteristics of the U.S. freight railroad industry, the company's strong competitive position within the industry, and moderate financial policies. Offsetting these strengths, to some extent, are price competition from other railroads and trucking companies in selected commodities, the capital intensity of the industry, and Union Pacific's 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 recent
