This is interesting. It states that railroad fuel surcharges exceeded actual fuel costs from 40% to up to 120% from 2004 through 2007. Railroad fuel costs grew by $188.54 per carload while average fuel surcharges per grain carload grew by $263.87 from 2001 to 2007.
http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5069478
Questions: What is the comparative trucking surcharge vs actual? Anyone know?
Will railroads be forced to rebate the so-called overcharges back to shippers?
Thanks.
Unless shipping rates are regulated, I would think about the only thing really sure to put a rebate programme in place would be the weighty consciences of all them shareholders. Dividend cheques (checks…[:D]) are always more palatable when they are representative of true earnings…aren’t they?
A COURT MAY REQUIRE SOME REBATES BUT THERE IS THE SUPORT EQUIPMENT THAT RRs need to keep ROW up to date. That certainly should be considered.
Well, it is a form of business fraud to get around existing contractual obligations. If – if – railroads were subject to the same business laws as everyone else …
I find it odd that the railroads do not roll the fuel surcharges into their prices ASAP. I would move as many prices into tariffs as possible and only have fuel surcharges for fuel price increases in the trailing 90 days. If fuel prices were to drop, and market conditions were appropriate,I could always take my rates back down.
Ditto to that. Hearings in Congress and the Courts have already put a damper on some of the excessive fuel surcharges, however; at the closing bell today, oil was nearing $130.00 a barrel. The railroad’s can’t continue to gouge customers at the same increasing rates as the rise in oil. Something has to give somewhere. Of course the idea of a fuel surcharge is yet another example of brilliant management taking innovative steps to solve a long term problem, yes?
They were doing both. They were adjusting the rates, and then imposing the surcharge on top of the rate. This is an example of the rail industry, once again, reaching beyond what is reasonable, and inviting re-regulation. In this instance, the STB was forced to issue “new rules” regarding fuel surcharges, and yet, given recent actions filed in the past few months, the railroads have continued to use surcharges as a means of exploiting the shippers – and I don’t mean shippers shouldn’t pay for this – it is the falsehood that is being perpetuated under the guise of surcharges, often in violation of a quoted tariff or contract.
1/26/2007: STB Press Release:
“The Surface Transportation Board today concluded its inquiry into railroad fuel surcharge practices by issuing a final rule declaring it an unreasonable practice for railroads to compute fuel surcharges in a manner that does not correlate with actual fuel costs for specific rail shipments. In its decision, the STB prohibits the assessment of fuel surcharges based on a percentage calculation of the base rate charged to freight railroad customers. The decision also prohibits “double-dipping”–applying to the same traffic both a fuel surcharge and a rate increase based on a cost index that includes a fuel component. Finally, the Board is proceeding with a proposal to monitor the fuel surcharge practices of the rail industry by imposing mandatory reporting requirements on all large (Class I) railroads.”
The railroad wants a committment, even under a tariff. They enter into agreements that contain the following langu
I can see where the double dipping is objectionable, but aren’t the railroads (and other sectors of the transpotation industry) entitled to base fuel surcharges on the “worse case scenario”? Given the volatility of fuel costs, wouldn’t it be suicidal for railroads to under represent anticipated fuel cost increases?
Well, that’s not what they’re claiming.
Wheather its UPS or the UP they are entitiled to do what they think is in their best business interest. Likewise their customers are entitled to use Fedex or the BNSF. If they have a contract and all else fails they are also free to invoke the arbritation clause or meet at the courthouse to have a judge and jury settle the matter.
Fuel surcharges are a hudge issue for railroads. I beleve the UP is second only to the US Navy as a diesel fuel consumer. It is also a hudge issue since fuel cost increases have a lower impact on railroads than truckers; it takes less fuel for a railroad to produce a ton mile of service.
I have always felt the fuel surcharges were a bit fuzzy. That is based on my dealings with FS back in the 1980’s. There were blatent examples of overcharging. Cant really comment on the subject today, as I dont know what form the surcharges re taking (percentage or per car amount).
The movement to surcharges is expanding beyond transportation. Recently major steel companies are adding surcharges to their contractual rates.
Ed