The ratings on Union Pacific Corp. reflect the favorable risk characteristics of the U.S. freight railroad industry, as well as the company's strong competitive position within the industry and its moderate financial policies. Offsetting these strengths to some extent are price competition from other railroads and trucking companies in selected commodities and the industry's capital intensity. Union Pacific operates a large rail network covering 23 states across the western U.S. It has a well-diversified traffic base, consisting of energy (largely coal; 20% of 2007 revenue), industrial products (20%), intermodal (19%), chemicals (15%), agricultural products (17%), and automotive (9%). Union Pacific's operating performance has improved significantly since late 2003, when it began to experience operating inefficiencies due to stronger-than-expected demand and
