Carriers respond to surcharge proposal
By Staff -- Purchasing, 11/2/2006 7:00:00 AM
Rail carriers have voiced their concern over the Surface Transportation Board's proposed ruling on railroad's “double dipping” in fuel surcharges. In August, the STB said it wanted railroads to calculate surcharges based on a fuel index, not a percentage of rates. Shippers complained that charging a fuel surcharge which is a percentage of a rate is unfair because the surcharge increases when rates increase, not when fuel increases.
In a statement, Union Pacific said, “The board has made some general, yet sweeping proposals that are inconsistent with the law and impractical to implement. If the STB wants to pursue the proposals, it should do so with a more complete understanding of the facts.”
Rail carrier Burlington Northern Santa Fe (BNSF) defended its need for a fuel surcharge, but says it is changing how it calculates the surcharge. BNSF reported $1.1 billion in fuel surcharges last year, accounting for more than 8% of its revenue, and spent $1.96 billion on fuel. In a filing with the Surface Transportation Board, BNSF said it doesn't try to profit from the surcharges and isn't fully recovering its higher fuel bills.
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