U.S. grain rail fuel surcharges surge 153% as harvest begins

  • Railroads raised average grain fuel surcharges to 48 cents per mile per rail car.
  • 153% year-over-year growth lifted surcharges to 11% of corn and soybean shipping costs.
  • Harvests began as farmers faced higher diesel prices and elevated rail transportation charges.

Average fuel surcharges on U.S. grain rail shipments rose 153% year over year to 48 cents per mile per rail car in the second week of September, according to U.S. Department of Agriculture data. The charges represented 11% of total rail transportation costs for corn and soybeans, up from 5% a year earlier, as harvests began and crude oil and diesel prices climbed amid the U.S. war with Iran. Farmers often absorb higher rail costs through a weaker basis, the gap between local cash grain prices and futures prices. Railroad fuel surcharges reached $2.93 billion industrywide in the second quarter, covering about 90% of diesel expenses, while analysts expect them to remain elevated through year-end. Farm groups are also concerned that a proposed Union Pacific acquisition of Norfolk Southern could increase railroad market power and reduce grain prices received by farmers.

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