Key facts
- Union Pacific reported a $91.1 million surplus from fuel surcharges in the second quarter.
- This surplus contributed to the company's profit, adding an estimated 14 cents per share.
- Norfolk Southern and CSX reported smaller fuel surcharge surpluses of $3.6 million and $8.4 million.
- The company stated fuel surcharges are a negotiated component of overall costs with customers.
- Union Pacific is seeking regulatory approval for an $85 billion acquisition of Norfolk Southern.
U.S. railroad Union Pacific collected $91.1 million more in fuel surcharges than it paid for fuel during the second quarter, a surplus that boosted its profits. This finding, reported by Reuters and detailed in a company filing with the Surface Transportation Board, has drawn criticism from some shippers who argue that surcharges intended to cover rising fuel costs, exacerbated by the Iran war, are sometimes excessive.
Union Pacific stated that its fuel surcharge increase is in line with the industry and that these surcharges are a negotiated component of overall costs with customers. Rivals Norfolk Southern and CSX also reported smaller surpluses, of $3.6 million and $8.4 million, respectively, in the second quarter. In contrast, BNSF reported its surcharges were $658.1 million less than its fuel costs for the first six months of the year.
For the first quarter, Union Pacific had a deficit, collecting $34.8 million less in fuel surcharges than it paid for fuel. However, for the combined first and second quarters, the company's surcharge revenue exceeded its fuel costs by $56.4 million. Union Pacific was the only major railroad to report a fuel surcharge surplus for the first half of the year.
Separately, Union Pacific is seeking regulatory approval for an $85 billion acquisition of Norfolk Southern. A coalition, including six state attorneys general, rival railroads, labor unions, and industry groups, opposes the merger, arguing it would reduce competition and increase shipping costs. Berkshire Hathaway-owned BNSF also noted that the combined entity would have incentives to apply Union Pacific's high-price strategies nationally.