On Track with Union Pacific, Insight from Chairman & CEO Jack Koraleski

How Union Pacific is meeting the freight demands of tomorrow

UP_CEO_1MBDelivering on our strategy to create customer value by working safely, delivering excellent service, driving efficiency, generating strong shareholder returns and reinvesting in our railroad is how Union Pacific is meeting today’s – and preparing for tomorrow’s – freight transportation needs.

U.S. freight shipments are forecasted to increase 62 percent between 2011 and 2040. By staying close to our roughly 10,000 customers and understanding their businesses, we are able to plan today for the railroad America requires tomorrow.

Our record $4.1 billion capital investment plan is critical in reducing inventory costs, getting goods to market and creating value for companies and industries that rely on our great service.

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Freight railroads are one of the world’s most capital-intensive industries. For example, Union Pacific wears out two to three miles of track daily. With replacement rail costing $500,000 to $750,000 per mile, this quickly adds up. Nearly half of the $4.1 billion we will invest in 2014 will go to infrastructure replacement, making our network safer and more resilient. We also plan to spend about $450 million to comply with the government mandate to install positive train control.

On top of that, we will spend upward of $1.5 billion on capacity, commercial facilities, new locomotives and equipment to enhance service, growth and efficiency. A great example is our intermodal and fueling facility in Santa Teresa, N.M., which opened in April. Strategically located near the U.S.-Mexico border, this 2,200-acre site allows for efficient operations on our rail corridor between Los Angeles and El Paso, providing advantages for cross-border trade.

These investments are made possible by Union Pacific shareholders – private investments, not taxpayer dollars – and position Union Pacific to serve America by providing the service necessary to sustain our country’s economic prosperity.