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-May 16, 2007

 
 

Transportation News: Shipper Suit Alleges Price Fixing by Rail Carriers on Fuel Surcharges, though Details are Questionable

 
 

Will Other Shippers Jump on the Class Action Bandwagon that Seeks Billions in Damages?

 
 

SCDigest Editorial Staff

 
 

A suit by a tiny shipper seeks potentially billions of dollars in damages from five major rail carriers over alleged price collusion related to fuel surcharges, and seeks class action status that would enable other shippers to jump into the fray. But some of the details here might cause some to wonder if this suit was created specifically to drag in other shippers rather than being in response to real damages suffered by the claimant.

The federal suit was brought by a small, closely held company named Dust Pro, out of Phoenix. The suit claims five major U.S. railroads "moved in uniform lockstep" to fix prices on fuel surcharges, which began to rise rapidly in 2004 as diesel fuel prices increased. The suit says that as a result of the practice, railroads "restrained competition in the market for unregulated rail freight transportation services," causing shippers to be overcharged billions of dollars.

Named in the suit are CSX; Norfolk Southern; Union Pacific; Burlington Northern Santa Fe; and Kansas City Southern.

In addition to being a pretty small company, the suit is related to the Dust Pro’s distribution of chemicals that help with soil stabilization, which it shipped by rail. However, Dust Pro ceased its soil stabilizer operations in late 2005. Finding information on the company via web searches is difficult. The web site www.dustpro.com, which was once active, is no longer available.

Further complicating things, the Surface Transportation Board ruled in January that some rail fuel-surcharge practices were improper, and announced new regulations on how rail carriers can assess fuel surcharges (See Surface Transportation Board Finalizes Rail Surcharge Regulations). This may support charges of price fixing in previous years. Many shippers believe fuel surcharges are by both rail carriers and the trucking industry and are not designed to simply recover rising fuel costs above contract freight rates, but to serve as a profit center.

 
     
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