Omaha, Neb: Union Pacific plans rate hike because of high fuel costs

OMAHA, Neb. (AP-CP) -- Facing high diesel fuel costs, Union Pacific Railroad (UNP.N) said Friday it will charge about three per cent more for hauling materials starting next month.

Other costs also are increasing, the U.S. railway said, including health benefits and higher wage costs.

In Canada, the biggest railway, Canadian National (CNR.TO), doesn't plan to impose a fuel surcharge, while smaller CP Rail has already raised rates to compensate for higher fuel costs.

At Union Pacific, price increases will begin in early October and contract rates will increase in accordance with specific escalation provisions, the railway said.

Diesel fuel prices have more than doubled over the last year, from about 18 cents US a litre to an average of nearly 30 cents US a litre, the railway said.

"Petroleum market analysts predict that prices may go higher yet and remain at levels far above where they have been for the past several years," said Union Pacific president Ike Evans.

Union Pacific has about 58,000 kilometres of track across 23 states from the Midwest to the West and Gulf coasts. It operates the country's largest fleet of diesel locomotives, consuming about 4.8 billion litres of fuel each year. In Canada, Montreal-based CN Railway has no immediate intention of implementing a fuel surcharge, said spokesman Mark Hallman.

"We're in a situation where we'll clearly be watching the fuel prices and where they go from here," he said. "We will be governed accordingly."

Despite a 54 per cent increase in fuel prices for the first half of this year over 1999, CN managed to keep increases in operating cosst to less than one per cent.

"The efficiencies of running a scheduled railroad have enabled us to keep a handle on costs but obviously we will have to continue to assess market conditions going forward," said Hallman.

Rival CP Rail of Calgary has already tacked on a fuel surcharge for shippers, said spokesman Paul Thurston, who wasn't sure whether it will be increased in light of the latest rise in fuel costs.

http://www.canoe.ca/MoneyNews/sept8_unionpacific.html

-- Carl Jenkins (Somewherepress@aol.com), September 08, 2000

Answers

This figures.

-- Uncle Fred (dogboy45@bigfoot.com), September 08, 2000.

It sure does figure. If anyone ever sat down and calculated the total freight haulage of all modes of transportation they'd see that the rails still remain supreme. There's no way they can avoid the stampede toward higher prices, due to energy increases, than anybody else.

Inflation here we come.

-- Chance (fruitloops@Hotmail.com), September 08, 2000.

If Union Pacific, the monster of the nation's freight haulers are to succumb to this, the others, i.e. CSX, Norfolk Southern, et al, will have to quickly follow suit.

Then what? As far as prices on everything we consume, who knows?

-- Wayward (wayward@webtv.com), September 08, 2000.