Union Pacific — research brief

# Union Pacific — research brief

*Prepared 2026-10-13 for the Business Model Canvas Gallery (display #100). Independent educational project; not affiliated with Union Pacific Corporation. Not investment advice.*

**Company:** Union Pacific Corporation (NYSE: UNP), Omaha, Nebraska; operating subsidiary Union Pacific Railroad Company (UPRR). One reportable segment (the Railroad).
**Fiscal year:** calendar year. FY2025 = year ended Dec 31, 2025.

Labels: **FACT** = company filing / release / regulator record · **SECONDARY** = press / third party · **INFERENCE** = our reading.

## Sources

1. Union Pacific Form 10-K for fiscal 2025, filed Feb 6, 2026 — https://www.sec.gov/Archives/edgar/data/100885/000010088526000037/unp-20251231.htm
2. Union Pacific Q4 and full year 2025 results (8-K Ex. 99.1), Jan 27, 2026 — https://www.sec.gov/Archives/edgar/data/100885/000010088526000032/a2026-01x278xkex991earning.htm
3. Union Pacific Form 10-Q for the quarter ended Jun 30, 2026, filed Jul 23, 2026 — https://www.sec.gov/Archives/edgar/data/100885/000010088526000250/unp-20260630.htm
4. Surface Transportation Board, UP–NS docket FD 36873 decisions page — https://www.stb.gov/resources/major-railroad-mergers/
5. Union Pacific customer notice CN2026-23 "Timeline Set for UP-NS Merger Decision," Aug 21, 2026 — https://www.up.com/announcements/customer-news/2026/CN2026-23

## Full-year financials (FY2025, year ended Dec 31, 2025) — FACT [2]

| Item | FY2025 | FY2024 | Change |
|---|---|---|---|
| Freight revenues | $23,220M | $22,811M | +2% |
| Other revenues | $1,290M | $1,439M | −10% |
| **Total operating revenues** | **$24,510M** | $24,250M | **+1%** |
| Total operating expenses | $14,664M | $14,537M | +1% |
| Operating income | $9,846M | $9,713M | +1% |
| Operating ratio | 59.8% | 59.9% | −0.1 pt (better) |
| Net income | $7,138M | $6,747M | +6% |
| Diluted EPS | $11.98 | $11.09 | +8% |

- Adjusted (non-GAAP) OR 59.3%, adjusted EPS $11.66, adjusted net income $6.9B; FY2025 ROIC (non-GAAP) 16.3%. FACT [2]
- FY2025 net income includes $250M of industrial park land sales (other income) and merger costs. FACT [1][2]
- Freight revenue ex-fuel surcharge +3%; revenue carloads 8,447K (+1%); average revenue per car $2,749. FACT [2]
- Other revenues: subsidiaries $718M (primarily logistics and commuter rail), accessorial $475M, other $97M. FACT [1]

### Freight revenue by commodity group, FY2025 — FACT [2]
| Group | Revenue | Δ | Carloads | Avg rev/car |
|---|---|---|---|---|
| Bulk (grain, fertilizer, food & refrigerated, coal & renewables) | $7,586M | +5% | 2,056K | $3,690 |
| Industrial (chemicals & plastics, metals & minerals, forest, energy & specialized) | $8,604M | +2% | 2,241K | $3,840 |
| Premium (automotive $2,398M; intermodal $4,632M) | $7,030M | −2% | 4,150K | $1,694 |

- Coal & renewables $1,786M (+20%); Mexico-linked freight revenue $2.9B (−1%). FACT [1][2]

### Costs FY2025 — FACT [2]
Compensation & benefits $4,897M · Purchased services & materials $2,626M · Depreciation $2,465M · Fuel $2,390M (avg $2.49/gal) · Equipment & other rents $912M · Other $1,374M. Interest expense $1,309M.

### Cash — FACT [2]
Operating cash flow $9,290M; cash capital investments $3,791M (incl. $311M lease buyouts); dividends $3,236M; buybacks $2,679M (paused for the NS deal); free cash flow (non-GAAP, after dividends) $2,292M. 2026 capital plan ~ $3.3B. [1]

## Network and resources — FACT [1][2]
- 32,889 route miles; 23 states in the western two-thirds of the U.S.; all major West Coast and Gulf Coast ports; only railroad serving all six major Mexico gateways.
- Equipment at Dec 31, 2025: 6,964 locomotives (6,359 owned/605 leased; multipurpose avg 26.1 yrs), 53,790 freight cars, 50,716 containers/chassis.
- Average employees 29,287 in 2025 (−3%); majority unionized; median pay $107,889.
- 7,000+ wayside detectors; PTC.
- Main rail competitor BNSF (parallel routes); trucks, barges and pipelines compete on lanes.

## How it gets paid — FACT [1]
- Contracts: private agreements, private rate/letter quotes, public circulars/tariffs, interline/foreign agreements.
- Each shipment is a distinct performance obligation; freight revenue recognized over time as it moves; customers pay after delivery.
- Volume-based customer incentives reduce revenue. Fuel surcharges lag fuel prices by ~2 months.

## Recent period (not annualized) — FACT [3]
- Q2 2026: operating revenues $6,864M (+12%), freight $6,518M (+12%), net income $1,993M, diluted EPS $3.36, OR 59.7%.
- H1 2026: revenues $13,081M (+7%), OR 60.1%.

## Norfolk Southern merger — FACT [1][3][4][5]
- Agreement Jul 28, 2025: each NS share → 1 UNP share + $88.82 cash; ~225M UNP shares and ~$20B cash. $2.5B mutual termination fee in some cases. Combined: 50,000+ route miles, 43 states.
- Shareholders of both approved Nov 14, 2025. STB rejected first application as incomplete (Jan 16, 2026); revised application accepted May 28, 2026 (held in abeyance); schedule adopted Aug 18, 2026: comments Nov 18, 2026; responses Feb 16, 2027; final briefs May 28, 2027; decision within 90 days of record close. Completion expected 2027.

## BMC read — INFERENCE
- Main engine: **usage-based** — revenue is a per-shipment freight charge (per carload / container) plus fuel surcharge; it scales with volume × price per car, like a utility's per-kWh bill. Not network-fees (that tag means a percentage cut of payment flows), not long fixed-fee enterprise contracts (contracts set rates, payment is per move).
- Moat is the owned right-of-way; pricing power ("core pricing") is the profit lever, along with operating ratio.

## Not stated / not invented
No valuation, market cap, customer counts or largest-customer share are used; none are taken from press.