April 24, 2006. The NS announced that, effective July 1, 2006, Norfolk Southern will revise its fuel surcharge program for local and joint-line non-intermodal traffic originating and moving on Norfolk Southern-issued tariff and public quotes issued on or after July 1, 2006.
The NS fuel surcharge is based on the monthly average price of West Texas Intermediate Crude Oil (The CN, CSX, and KCS also base their FSC on WTI average price). Fuel prices have reached a level that Norfolk Southern believes is likely to be sustained and the fuel surcharge is being adjusted to reflect this level. Shippers are finally receiving some relief for high fuel surcharges!
The current fuel surcharge has been in place since March 3, 2004 and is 0.4 percent of the line-haul freight charge for every $1.00, or portion thereof, by which the WTI Average Price exceeds $23.00.
The new fuel surcharge for public price authorities will be 0.3 percent of the line-haul freight charge for every $1.00 per barrel, or portion thereof, by which the WTI Average Price exceeds $64.00, starting at a WTI Average Price of $64.01. Click here to view the news release on the NS website.
The following table demonstrates what the fuel surcharge rates would be under the current and new plan at different WTI price levels:
Avg. WTI |
Current |
New FSC as of July 1
|
$ 50.01 |
11.2% |
0.0% |
$ 55.01 |
13.2% |
0.0% |
$ 60.01 |
15.2% |
0.0% |
$ 65.01 |
17.2% |
0.6% |
$ 70.01 |
19.2% |
2.1% |
$ 75.01 |
21.2% |
3.6% |
$ 80.01 |
23.2% |
5.1% |
$ 85.01 |
25.2% |
6.6% |
$ 90.01 |
27.2% |
8.1% |
$ 95.01 |
29.2% |
9.6% |
$ 100.01 |
31.2% |
11.1% |
The average monthly WTI prices over the past year are below.
Month |
Avg. WTI |
Feb-05 |
$ 47.97 |
Mar-05 |
$ 54.22 |
Apr-05 |
$ 53.04 |
May-05 |
$ 49.83 |
Jun-05 |
$ 56.31 |
Jul-05 |
$ 58.70 |
Aug-05 |
$ 64.97 |
Sep-05 |
$ 65.57 |
Oct-05 |
$ 62.37 |
Nov-05 |
$ 58.30 |
Dec-05 |
$ 59.43 |
Jan-06 |
$ 65.51 |
Feb-06 |
$ 61.63 |
Mar-06 |
$ 62.90 |
Apr-06 |
$ 69.40 |
The government's Energy Information Association is predicting and average WTI price of $65 in 2006 and $61 in 2007. Some analysts outside of the government have predicted substantially higher crude oil prices.
Norfolk Southern’s move to reduce their fuel surcharges comes one week after the Wall Street Journal’s article “Tensions Mount Over Fuel Charges Set by Railroads” and two weeks before the STB is scheduled to hold a public hearing on fuel surcharges.
Upcoming monthly fuel surcharges may be viewed on RSI’s Fuel Surcharge Page. Reduce your administrative cost of managing constantly changing rail rates, tariffs, and fuel surcharges through RSInet’s rate management tools and freight payment. Contact us for more information.
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