 LEGISLATIVE BULLETIN – March 11, 2005
According to fuel prices and fuel efficiency numbers from BNSF’s
financial reports, the fuel surcharge on some grain movements from North
Dakota is five or six or seven times as much as the railroad is
incurring in additional fuel expense.
On one randomly-chosen example of a ND wheat shuttle train to
Portland, Oregon the surcharge is three times the increased cost of
fuel, which means an overcharge of $27,000 per train.
CP has a lesser surcharge. When
BNSF was 9%, CP was 5.5%. Both
railroads have testified to the North Dakota legislature that they
don’t make any money on fuel surcharges. It isn’t difficult to figure out on your own grain shipments. Here are some numbers you will need. The last time BNSF had a zero percent fuel surcharge was in June and July 2002. Their reported fuel price then was 73.5 cents per gallon. When the fuel charge was 9% this past December and January they were using a 4th qtr 2004 fuel cost of $1.14 per gallon, latest available.
Railroads measure fuel efficiency in Gross Ton Miles (GTM) per
gallon. A GTM is one ton of
equipment or freight moved one mile.
A loaded 268,000 lb. car (134 tons) moved 100 miles is 134 X 100
= 13,400 GTM. BNSF reports an average efficency of 761 GTM per gallon of
fuel in 2004. At http://www.bnsf.com/bnsf.sph/RailMiles
you can put in the name of two locations on the BNSF and after two
clicks the miles between the two comes up.
Keep in mind that the 761 is an average.
Like mileage on your car, it can vary by trip.
The locations in the examples below are very similar to actual
locations, but are disguised slightly in miles and rate. A 26-car train of wheat moves 260 miles from Graintowneast, ND to Minneapolis, MN. One 200-ton locomotive is used in this example. 26 cars X 31.5 tons per car
= 819 tons of empty cars 1019 tons X 520 miles round trip = 529,880 Gross Ton Miles 102.5 tons wheat per car X 26 cars X 260 miles =
692,900 GTM 1,222,780 divided by 761 GTM per gallon = 1607 gallons fuel used 1607 gallons X $1.14
per gallon = $1832 cost of fuel 4th qtr
2004 $51,168 freight X 9% fuel surcharge = $4605 surcharge That’s a really good deal for the railroad, but it gets even better. 1607 gallons X $0.735 = fuel cost $1181 in June 02. The $1832 today minus $1181 means actual increase in fuel cost of $651. But the surcharge,
supposedly to cover increased cost, is $4605, over
seven times increased cost. NOW LET’S DO A 110-CAR SHUTTLE OF WHEAT
WESTBOUND – Remember that the empty cars weigh about the same,
but carry more, and three locomotives are used in this example. A 110-car shuttle of wheat moves 1295 miles from Graintownwest, ND to Portland, OR. 110 cars X 31.5 tons per car = 3465 tons of empty cars 4065 tons X 2590 miles round trip = 10,528,350 Gross Ton Miles 111.5 tons wheat per car X 110 cars X 1295 miles =
15,883,175 GTM
34,706 gallons X $1.14
per gallon = $39,565 cost of fuel 4th qtr
2004 $461,670 freight X 9% fuel surcharge = $41,550 surcharge The 34,706 gallons X $0.735 = fuel cost $25,509 in June 02. The $39,565 today minus $25,509 means actual increase in fuel cost of $14,056. But the surcharge,
supposedly to cover increased cost, is $41,550, almost
three times increased fuel cost and an overcharge of $27,494. If this makes you see red, then there are several
people you should tell that to:
Chmn Roger Nober
email: noberr@stb.dot.gov Remember that your disgust is not with our
elected leaders.
Railroads have known for many months that their
method of calculating fuel surcharges has little to do with their
increased costs on specific movements.
We are told it is “a complex issue”, that assessing the
surcharge as a percentage of the rate is the easiest for the railroad,
and that they are working on resolution of the problem.
If this was not running in the railroad’s favor the problem
would be fixed overnight. It
is time to tell the railroad we’ve had enough, and involve elected and
appointed officials in the state and at the national level.
This simply can’t go on. With
oil prices predicted to jump to $70 per barrel or more, the exploitation
of grain shippers will only get worse. The state legislative bill dealing with fuel
surcharges, HB 1370, is in the hands of the Senate Transportation
Committee. The railroads
have said the state has no jurisdiction, that it is preempted by federal
law. If the state passes a law the railroads might challenge it.
Imagine that, challenging a law so they can go on with this. If anyone disputes the accuracy of the numbers in this fax, please ask for that person’s version.
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