Union Pacific (UNP) 19th Annual Global Transportation & Industrials Conference summary

Opening remarks and business update

• Leadership highlighted strong execution in safety, service, and operational excellence, maintaining industry-leading return on invested capital and operating ratio into 2026, with competitors trailing by 400 basis points.

• Year-to-date 2026 results show continued industry-leading performance with a 1Q 2026 operating ratio of 64.2% and strong network fluidity, as measured by high service performance indices.

• Quarter-to-date volumes are up 1%, with grain and grain products up 10–11%, but coal volumes down 14% due to contract lapses, mild weather, plant outages, and lower natural gas prices; bulk segment remained flat year-over-year.

• Industrial segment grew 4%, led by chemicals, plastics, metals, and minerals, while premium segment saw record domestic intermodal volumes but softer international trends.

• Rising fuel prices, reaching $4.25/gallon in May, are creating margin headwinds and pressuring expenses.

Merger application and regulatory process

• The merger application was revised to address STB feedback, including a full waybill analysis, robust data, and clear commitments on competitive issues and ownership limits in TRRA.

• Application uses 100% traffic files for the first time in any merger, providing more precise data.

• Commitments include not exceeding 50% ownership in TRRA and ensuring job guarantees for unionized employees, with over 80% already covered by agreements.

• The application is expected to be deemed complete next week, with a regulatory review timeline of about one year.

• Analysis confirms the merger will deliver approximately $3.5 billion in annual shipper savings by shifting freight from truck to rail and taking about 2.1 million trucks off the road.

Competition, concessions, and synergies

• No material loss of competition is demonstrated, with preserved access to two Class I railroads at all 2-to-1 shipper facilities and no loss of independent routes or reduction in geographic competition.

• The merger is positioned as enhancing competition, especially against trucks, by reducing touch points, improving speed, and lowering costs for customers.

• Reciprocal switching is supported if applied industry-wide, and all gateways will remain open; specific concessions are limited due to the end-to-end nature of the merger.

• Revenue synergies were revised to $1.8 billion (from $2 billion) due to a shift toward intermodal and truck conversion, while cost synergies remain at $1 billion, offset by higher labor needs.

• Management is prepared to walk away if the deal is not additive, emphasizing the standalone strength of the business.