I’ve heard complaints about railroad fuel surcharges. Don’t they have the right to pass on fuel price increases like every other industry has?
A recent analysis by economic firm Snavely King Majoros O’Conner and Lee of the fuel surcharges being paid by captive shippers revealed the charges are unreasonable. They are not based on actual fuel consumption on the movement in question, are inappropriately linked to freight rates (not the actual fuel costs), and are often recovered through other means (such as the Rail Cost Adjustment Factor) so that the railroads are double recovering for these costs. The study estimates that the railroads have collected almost $1 billion in unjustified fuel surcharges in 2005 alone. Because these fuel surcharge excesses have been allowed to continue until at least April 25, 2007, the railroads probably have pocketed almost $3 billion in excessive fuel surcharges from its customers since 2004. Wall Street analysts have even praised some of the railroad companies for turning their fuel surcharges into a strong profit center! On January 25, 2007, the Surface Transportation Board found that the railr
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