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Archer Daniels Sues Railroads

posted on March 28, 2008


The Agriculture Department will release its much anticipated Prospective Plantings report next week, providing the "official" first round score of this year's acreage battle. Most analysts expect more land to be planted in soybeans this spring and fewer acres devoted to corn.

Last year, U.S. growers planted the most acreage in corn since World War II en route to a 13.1 billion bushel harvest. Much of the record crop moved to market on America's railways.

This week, one of the world's largest agribusiness companies and a major rail customer sued five U.S. railroads, accusing them of violating antitrust laws in fixing their fuel surcharges.

Archer Daniels Sues Railroads On Tuesday, Archer Daniels Midland, one of the world's largest food processors and a leading producer of corn-based ethanol, filed an antitrust suit in a Minneapolis Federal Court against five major U.S. railroads, accusing the companies of fixing fuel surcharges.

ADM moves millions of tons of corn, soybeans, and other agricultural products by rail every year and, according to company officials, paid more than $250 million in fuel surcharges since 2003. The lawsuit does not claim that the fees are illegal, but rather the railroads illegally collaborated to set the surcharges.

The railways named in the lawsuit include the Union Pacific Railroad Company, BNSF Railway Company, CSX Transportation Incorporated, Norfolk Southern Railway Company and the Kansas City Southern Railway Company.

The lawsuit alleges that the railroads agreed to tie their surcharges to the same fuel price index, and to impose changes in the fee structure on the same day. ADM claims some of the railroads named in the lawsuit hedge their fuel costs, and therefore, actual fuel spending should vary from one railroad to the next. According to the lawsuit, uniform pricing "could not have happened by chance or coincidence."

In January of 2007, the federal Surface Transportation Board said railroads must link surcharges to their actual fuel costs. Spokesman for two of the companies -- the BNSF and CSX railroads, said the they are in compliance with surcharge laws and regulations.


Tags: news trains transportation