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<< Rail News Home: Mechanical

3/29/2005    Freight News

Rail News: Mechanical

BNSF to bag freight bill, adopt mileage as basis of fuel surcharge

Next year, BNSF Railway Co. will begin assessing fuel surcharges based on mileage instead of a percentage of a shipper's freight bill. Taking effect Jan. 1, the mileage-based surcharge will be the railroad industry’s first, BNSF officials said in a prepared statement.

The surcharge will apply to shipments originating and terminating on BNSF, its portion of some interline traffic, and certain moves involving the Class I and one or more short lines – about three-fourths of BNSF’s traffic volume. The remaining 25 percent of traffic (joint-rate interline moves) will continue to be covered by existing percentage fuel surcharges because of current interline billing systems and practices.

BNSF will calculate mileage based on the Household Goods Carriers' Mileage Guide. Surcharge tables will be based on the On-Highway Retail Diesel Fuel prices published by the U.S. Department of Energy and reflect fuel use intensity of four traffic segments: coal and taconite; carload and agricultural products; trailers; and double-stack container moves.

"In this era of tight transportation capacity, rapidly rising fuel prices and fuel-price volatility, we believe a mileage-based fuel surcharge program is the most direct and accurate method of reflecting the impact of fuel price changes," said BNSF Executive Vice President and Chief Marketing Officer John Lanigan. “Many of our customers already participate in mileage-based fuel surcharge programs that the trucking industry initiated in the early 1990s."

BNSF plans to modify its computer systems for the surcharge change. Some shippers also will need to adapt their computer systems to verify mileage-based surcharges.

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