BNSF to assess fuel surcharges based on mileage
The BNSF Railway Co. will assess fuel surcharges on a mileage basis, starting Jan. 1. The mileage-based surcharge, first in the railroad industry, will replace BNSF's current fuel surcharge, which is assessed as a percentage of a customer's freight transportation bill.
'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 on BNSF and our customers,' said John Lanigan, BNSF's executive vice president and chief marketing officer.
The mileage-based fuel surcharge will apply to movements that originate and terminate on BNSF, and to the BNSF portion of Rule 11 shipments, a type of interline shipment where each carrier bills the customer separately for their services. The surcharge will also apply to certain movements involving BNSF and one or more short lines.
Those movements account for about 75 percent of BNSF's volume. The remaining 25 percent represent joint-rate interline movements with other Class I railroads, and will continue to be covered by BNSF's existing percentage fuel surcharge, due to current interline billing systems and practices.
The change to a mileage-based surcharge 'will require significant modifications to BNSF's computer systems,' BNSF Railway said in a statement. 'Some customers will need to make certain systems modifications to verify mileage-based fuel surcharges. The effective date was set to allow both customers and BNSF adequate time to implement and test system changes.'
Lanigan noted that 'many of our customers already participate in mileage-based fuel surcharge programs that the trucking industry initiated in the early 1990s.'
Mileage calculations will be based on the Household Goods Carriers' Mileage Guide, published by Rand McNally. Surcharge tables will reflect the fuel use intensity of four types of rail movements: coal and taconite, carload and agricultural products, intermodal trailers, and intermodal double-stack containers. The tables themselves will be based on the On-Highway Retail Diesel Fuel (HDF) prices published by the Energy Information Administration of the U.S. Department of Energy.
The BNSF Railway Co., which operates on 32,000 route miles in 28 U.S. states and two Canadian provinces, is a subsidiary of the Burlington Northern Santa Fe Corp. For more information, visit http://www.bnsf.com.