Friday, January 26, 2007

To dip, or not to dip...that is the question!

STB: Rail fuel surcharges must be tied to actual costs

The U.S. 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.

The STB is also proceeding with a proposal to monitor the rail industry’s fuel surcharge practices by imposing mandatory reporting requirements on all large Class I railroads.

“Our decision today brings common sense and fairness to the railroads’ implementation of fuel surcharges,” STB Chairman Charles D. Nottingham said. “This new rule will preclude them from selectively imposing surcharges in a manner that bears little relationship to actual fuel use. It will also remove the possibility that railroads will view fuel surcharges as a profit center."

Yeah, that sounds good...but who is going to impose the same idea on the steamship lines and the conferences? One of you shippers or importers out there feel like opening that discussion during the 2007 Transpacific rate negotiations? HA! Good luck!


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