Galloping energy prices are hitting rail freight operators. To compensate, Lineas introduces a dynamic energy surcharge

photo: Lineas press materials/Galloping energy prices are hitting rail freight operators. To compensate, Lineas introduces a dynamic energy surcharge

The Belgian private rail freight operator Lineas, announced that it will apply a dynamic energy surcharge to all its transports as of April 1st, 2022 to compensate for soaring energy prices. While such a surcharge is common practice for other modes of transportation, Lineas is the first rail company to implement this measure and anticipates that other players in the market will follow suit.

Energy prices are currently skyrocketing, impacted by the war in Ukraine and concerns about possible supply shortages. At EEX, Europe’s leading energy market, the spot price per Megawatt hour has more than tripled compared to average prices in 2021. Also, diesel, which railway undertakings need where electric locomotives cannot operate, has become significantly more expensive.

This economic hardship has reached a level that cannot be absorbed by Lineas anymore. In order to ensure a sustainable rail freight offer, the company is required to pass energy costs on to its customers.

Lineas plans to implement the dynamic energy surcharge effective 1 April 2022 and is currently in contact with its customers to do so. The surcharge is designed to absorb Lineas’ rising energy cost and takes into account hedging mechanisms that limit the company’s cost increase. The surcharge is applied on top of transport revenues and will be adapted on a monthly basis, following the development of energy prices and taking into account possible energy compensations by national authorities. It will be published on the company’s website.  The surcharge differs between domestic and international transports to account for differences in how energy is charged to railway undertakings in different markets. At the current spot price of 300 EUR per Megawatt hour, the surcharge will range between 3,5% (Netherlands) and 8,1% (Germany).

Energy surcharges are common within the transport industry, e.g. in the form of diesel surcharges for road transportation or the fuel surcharge in air cargo. Rail operators traditionally have catered for energy costs as part of yearly contract negotiations. In the current market environment, with soaring energy prices, these calculations are not viable anymore for Lineas.

Lars Redeligx, Chief Commercial Officer at Lineas: “The introduction of an energy surcharge is long overdue in the rail industry. We are the greenest transport mode emitting 90% less CO2 compared to road transport and using 6 times less energy than the truck. Yet, we are not immune to the explosion of energy costs. If we want to secure our social mission and be able to continue serving our customers, we have to adopt an energy surcharge as is the practice in other sectors‘‘.

Source: Lineas press releases