US Rail Fuel Surcharges Hit Record Highs, Squeezing Farmers Amid Harvest Season
Railroad fuel surcharges on grain shipments in the US have more than doubled over the past year, causing financial strain for farmers during harvest season. The average fuel surcharge rate climbed to 48 cents a mile per rail car in the second week of September, up 153% from last year's rate, according to USDA data.
This surge is particularly challenging for farmers as corn and soybean harvests begin, with crude oil and refined product prices pushing diesel fuel costs higher. As railroads pass excess costs on to shippers, growers typically see a weaker basis, meaning they receive a lower price when selling crops.
Farmers like Gary Millershaski, chairman of US Wheat Associates, are experiencing the impact firsthand, with his local grain elevator's basis at 70 cents per bushel below Chicago Board of Trade K.C. hard wheat futures, compared to the usual 40 cents under.