US railroad Union Pacific turned charges meant to cover fuel costs from Iran war into profit

U.S. railroad Union Pacific collected $91.1 million in fuel surcharges beyond what it spent on fuel during the second quarter, significantly outpacing its competitors, according to a company filing with the Surface Transportation Board. This surplus resulted in higher profits, highlighting concerns among some shipper groups that the surcharges may be excessive.

Despite the criticisms, Union Pacific stated that its fuel surcharge increases align with industry trends. Only Norfolk Southern and CSX reported similar surpluses of $3.6 million and $8.4 million, respectively. Union Pacific attributes the surplus to the costs of transporting fuel to rail yards and notes that it is a component of the overall negotiating cost with customers.

The company is seeking regulatory approval for a $85 billion acquisition of Norfolk Southern, which would give the merged entity a 42% market share based on carloads, excluding double-counted interline shipments. Critics argue that this merger would reduce competition and increase shipping costs.