08/15/06 A ruling on rail fuel surcharges

Farm and Ranch August 15, 2006 The federal Surface Transportation Board is being applauded by grain shippers for a decision that will force the nation's major railroads to make significant changes in the way they calculate and assess fuel surcharges. Randall Gordon of the National Grain and Feed Association says shippers had been concerned that the surcharges did not really reflect actual fuel costs the carriers were incurring. Gordon: "One of the reasons for that was a number of carriers, other than the Burlington Northern Sante Fe, were applying a percentage increase to the freight rate rather than trying to accurately estimate what their actual costs of fuel were for a particular movement." Gordon says that practice was particularly discriminatory to wheat which has higher freight rates than many other commodities. And Gordon says some railroads were double-dipping, including higher fuel costs in their rates plus adding a fuel surcharge. But after a hearing on the issue the Surface Transportation Board has proposed a rule requiring greater transparency by the railroads in calculating fuel charges. Gordon; "Second, very importantly, STB will require that carriers basically develop fuel surcharges in a way that reflect the increased cost of fuel for particular movements rather than just coming up with a single percentage they apply across the board." Gordon says this may well be the first decision in the STB's history where it sided with shippers rather than rail carriers. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.