Fuel costs eat into railroad profits

Via TheStreet.com:

The company said its diesel fuel costs for the fourth quarter are projected to be more than $200 million than a year ago. In November and December, fuel costs were some $65 million higher than originally expected, Union Pacific said.

“During our October 18th earnings release conference call, we cautioned investors that if fuel costs continued to rise, our financial guidance targets would be at risk,” said CFO Rob Knight in a statement. “Fourth quarter earnings will clearly be impacted by the combination of steep fuel cost increases and the recovery delay inherent in the surcharge programs.”

This year ocean carriers got hit with generally across-the-board increases by the railroads and I have heard that they expect more cost increases for 2008 as well. If you bring containers into any inland points via rail, talk to your carriers early as you may be getting a bump up in your freight rates. Not to mention higher bunker fuel surcharges as well.