03/10/2005

Customers

Effective May 1, 2005 Union Pacific Railroad will change its billing policy on all rail shipments moving southbound from the U.S. and Canada into Mexico .

Today, customers have three billing options, detailed below, for shipments moving southbound from the U.S. and Canada into Mexico . Currently, customers use Option 1 most frequently. The rail industry has been working to improve velocity and streamline operations for shipments that move across the border to Mexico . Union Pacific believes that this effort will improve billing accuracy and expedite shipments that move over Union Pacific's lines. Therefore, Union Pacific is asking customers to convert to Option 2 or 3. Customers are not required to use Option 2 or 3. However, Union Pacific will assess a per car diversion/reconsignment fee for all shipments billed under Option 1 effective May 1, 2005.
Exception:  Trainloads of grain moving from one origin to one destination in Mexico are not subject ot the diversion/reconsignment fee.

Option 1: Customer provides a single-line waybill to each railroad handling a U.S. or Canada shipment to Mexico . This requires re-billing at the border. With this option, each railroad provides a separate invoice. Effective May 1, 2005, Union Pacific will charge the customer a diversion/reconsignment fee for each car billed under this option.

Preferred Methods Effective May 1, 2005:

Option 2: Customer provides an interline waybill to the origin carrier which includes the entire route from the origin to the final destination. With this option, the origin railroad provides a single invoice.

Option 3: Customer provides a Rule 11- waybill to the origin carrier which includes the entire route from the origin to the final destination. With this option, each railroad provides a separate invoice.

Customer Benefits :

• Improves communications among shippers, receivers and carriers, thereby reducing failure and administrative costs.
• Streamlines rail operations, thereby decreasing congestion and expediting transit times.
• Improves shipment visibility, thereby enabling customers to track the entire rail trip from origin to destination (using www.up.com or www.Steelroads.com).
• Improves customs clearance process with electronic transmission, thereby reducing paperwork and transit delays caused by waiting for clearance papers.
• Supports Customs Trade Partnership against Terrorism (C-TPAT) initiatives to improve border security and minimize border delays.
• Fulfills the more stringent manifest reporting requirements of the U.S. Department of Homeland Security (DHS), Customs and Border Protection (CBP)Trade Act, the Canadian Security Initiative (CSI) and Mexico Customs.

As a reminder, customers are not required to change their billing from Option 1 to Options 2 or 3. However, beginning May 1, 2005, Union Pacific will assess an introductory $150 per car diversion/reconsignment charge on all shipments that are billed by customers who use Option 1. Effective July 1, 2005 UP will increase this charge to $290 per car billed under Option 1.

The details of this charge will be found in tariff UP 6004-series, item 8540. These waybill changes can be implemented without changing the current contract or tariff agreements.

Please contact Union Pacific if you require technical assistance in changing your present EDI billing process.

EDI Billing Questions Walt Gras 1-800-872-1045, extension 9046

Yolanda Revel (956) 721-3286

For additional information on this change please contact your Union Pacific Marketing and Sales representative or Steve Jensen, Mexico Marketing at (402) 544-3915.