(The Associated Press circulated the following article on October 4.)
FORT WORTH, Texas — Burlington Northern Santa Fe Corp. defends its fuel surcharge as a necessary response to rising costs, but the freight railroad says it is examining how it calculates the extra fee on shipments.
Shippers have complained that Burlington Northern and other railroads are ”double-dipping” — levying fuel surcharges on top of general rate increases that are also partly based on fuel costs.
The Fort Worth-based railroad reaped $1.1 billion in fuel surcharges last year, or more than 8 percent of its revenue. It says it tries to avoid double-dipping and is trying to use new cost-adjustment formulas that don’t include fuel expenses.
The railroad made the comments in a filing Monday with the federal Surface Transportation Board, which is under pressure from shippers to change the way railroads calculate fuel surcharges. This week, the agency issued a proposed rule intended to limit excessive fuel surcharges by prohibiting double-dipping.
Burlington Northern said in its filing that fuel surcharges are accepted in the airline, trucking and railroad industries. It said diesel fuel costs rose 144 percent from 2001, when it began charging a special fuel levy, to 2005 while other costs rose 25 percent.
The railroad said it doesn’t try to profit from the surcharges and isn’t fully recovering its higher fuel bills.
Burlington Northern imposed surcharges on some customers that were based on a percentage of its regular rates. Many customers complained that this wasn’t directly related to fuel costs.
Last year, the company announced it would link surcharges to a mix of mileage and fuel usage and is phasing in this approach. On Monday, the company said the new program should satisfy the transportation board’s request for fees that are more closely tied to fuel usage.
The company added that it continues to analyze its methods for calculating surcharges.
In its annual financial report, Burlington Northern reported it took in about $1.1 billion in fuel surcharges last year, up from $350 million the year before. The company spent $1.96 billion on fuel, its second-largest expense behind employee pay and benefits.
Shippers and public officials have criticized Burlington Northern.
At a hearing in May, Montana Gov. Brian Schweitzer said Burlington Northern was charging more than the cost of fuel needed to move goods across his state.
Burlington Northern’s BNSF Railway Co. is the nation’s second-largest freight railroad behind Union Pacific Corp. of Omaha, Neb.