Form 10-K - Union Pacific
Form 10-K - Union Pacific
Form 10-K - Union Pacific
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Intermodal – Fuel surcharge gains, including better<br />
contract provisions for fuel cost recovery, and pricing<br />
improvements, partially offset by lower volume,<br />
increased freight revenue from intermodal shipments<br />
in 2011 compared to 20<strong>10</strong>. Volume from international<br />
traffic decreased 5% in 2011 versus 20<strong>10</strong>, driven by<br />
softer economic conditions, reflected in a muted<br />
international peak shipping season, which usually<br />
starts in the third quarter, and the loss of a customer<br />
contract. Conversely, conversions from truck to rail<br />
and recovering consumer demand offset competition<br />
for domestic shipments, resulting in a 2% volume<br />
increase in domestic shipments during 2011.<br />
2011 Intermodal Revenue<br />
Increased volume, higher fuel surcharges (including new recovery provisions in contracts renegotiated in<br />
20<strong>10</strong>), and pricing gains drove the increase in freight revenue from intermodal shipments in 20<strong>10</strong><br />
compared to 2009. Domestic and international traffic increased from 2009 levels, reflecting improvements<br />
in economic conditions. International volumes grew in response to continued inventory restocking and<br />
higher consumer demand. Domestic shipments increased as a result of conversions from truck to rail<br />
fueled by improved service. A new contract with Hub Group, Inc., which included additional shipments,<br />
was executed in the second quarter of 2009 and contributed to the increase in domestic shipments.<br />
Mexico Business – Each of our commodity groups includes revenue from shipments to and from Mexico.<br />
Revenue from Mexico business increased 16% to $1.8 billion in 2011 versus 20<strong>10</strong>. Volume levels<br />
increased 9% in aggregate versus 20<strong>10</strong>, with particularly strong growth in automotive and industrial<br />
products. Energy was the one commodity group that declined as one of our customers conducted a<br />
supplier contract renewal during the year, shifting transportation modes from rail to truck during the<br />
process.<br />
Revenue from Mexico business increased 30% in 20<strong>10</strong> versus 2009 to $1.6 billion. Volume levels for all<br />
six commodity groups increased, up 25% in aggregate versus 2009, with particularly strong growth in<br />
automotive, industrial products, and intermodal shipments.<br />
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