Fuel is Fueling the Railroad Stock Surge…but is it a flash in the pan?
Why are all the railroad stock prices surging through the roof? The simple answer is that it is cheaper to ship by train than by truck due to cost of fuel. But what is going to happen when the railroads have to refund their fuel surcharges back to the shippers? The ADM lawsuit that is hovering over the rail industry could spell doom for the railroad stockholder.
The Union Pacific Railroad’s first quarter numbers were recently published and it indicated that the railroad’s earnings were up $57 million. That is a staggering number compared to the first quarter of 2007; however, if you look a little further it looks bleaker for the railroad giant. UP’s freight revenue grew 11% during the first quarter to a whopping $4.1 billion, but if you look at their figures the reason for the increase was due to a 11% increase in average revenue per car. What does that tell you? The UP increased their rates and saw NO NEW BUSINESS!!! They are playing a shell game with the stockholders money. The problem with shell games is that there isn’t actually a pea under the shell. With a slight of hand the pea is removed and the gambler always loses. The UP removed the pea and the stockholders are betting their fortunes on something that isn’t actually there…
The ADM lawsuit has a little bit of merit in the sense that to have a contract based on RCAF and have a fuel surcharge isn’t right.
The UP provided the customers with a service that was more valuable in 2007 than in 2006. Ask ADM why they are selling less wheat in 2008 for more money than in previous years. As to using the quoted West Texas Intermediate Crude to peg the fuel surcharge. It has some bearing
Trainfinder, as long as you’re using multiple personalities within your own posts, can you bring back “Kissmycaboose?” I always had a good chuckle whenever I saw that one.
I don’t understand why you are calling this a “rant”, because it seems as though your response was nothing but a rant. I’m not saying that railroads can’t increase their shipping costs, but a surcharge on top of the shipping charges is nothing but gravy…or profit margins. This is a railroad site not a farm site. I’m not arguing why ADM raised their rates…I don’t care. I’m in the railroad industry and the mis-appropriation of fuel surcharges as profits is criminal. There is a CSX report out on harassment and intimidation, but where is the report on the illegal use of fuel surcharges?
A handful of senior people at Arthur Anderson & Co, at one time the largest accounting firm in the world, did something like that. The US Government caught them at it in the Worldcom case and fined them a few million dollars, pocket change. The next day Arthur Anderson began laying off all their US employees and winding up the company because their Word was no longer any good. For an auditing firm their Word is their most precious asset, once it was gone no company would hire them. They can be fooled but if they knowingly break trust, they are finished.
the up was founded by the most corrupt railroad contracts in gov. history. They have fooled the best of them for over 150 yrs. While they know they will eventually get caught till then “buyer beware” Stay Happy RMR
I’ve been reading some of these articles and noticed that most of you guys are like a bunch of old grannies. You sit and criticize people without actually contributing anything. You call people trolls, but your are the real troll. A troll is someone who causes trouble and when you sit around and call people names you begin to fit the profile. If you can’t say something constructive then SHUT UP!!!
