The ratings on Omaha, Neb.-based Union Pacific Corp. reflect the favorable risk characteristics of the U.S. freight railroad industry, as well as the company's strong competitive position in the industry and its moderate financial policies. Price competition from other railroads and trucking companies in selected commodities, and the capital intensity of the industry somewhat offset these strengths. 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; 22% of 2008 revenue), industrial products (19%), intermodal (18%), agricultural products (18%), chemicals (15%), and automotive (8%). Union Pacific's operating ratio (operating expenses, including depreciation, as a percentage of revenues) declined (improved) to 77% as of the nine
