Union Pacific (NYSE:UNP) collected $91.1 million more from fuel surcharges than it spent on fuel during the second quarter, according to a regulatory filing with the Surface Transportation Board first reported by Reuters.
The surplus was substantially larger than those reported by rival rail operators and contributed directly to Union Pacific’s profitability. The figures are likely to add to concerns among some freight customers that surcharges intended to compensate railroads for higher petroleum costs linked to the U.S. and Israeli war on Iran can generate revenue beyond the underlying increase in fuel expenses.
U.S. railroads provide a relatively rare window into the economics of these charges because they are the only transportation companies in the country required to report both fuel expenditure and fuel surcharge revenue to regulators.
Union Pacific says surcharge increases are consistent with industry
Union Pacific said the year-on-year percentage increase in its fuel surcharges was consistent with broader industry trends.
Surface Transportation Board filings showed that only Norfolk Southern and CSX also generated fuel surcharge surpluses during the second quarter. However, their excess revenue was considerably smaller at $3.6 million and $8.4 million, respectively.
“Ultimately, fuel surcharges are a component of the overall cost we negotiate with customers and something they take into consideration when choosing Union Pacific and the service we provide,” Union Pacific said in a statement.
The railroad said last month that fuel surcharges contributed 14 cents per share to second-quarter earnings. Based on the number of shares outstanding, that equates to approximately $83.2 million in profit.
Norfolk Southern merger faces competition concerns
The fuel surcharge figures come as Union Pacific seeks regulatory clearance for its proposed $85 billion acquisition of Norfolk Southern, a transaction that would create the first railroad network spanning the continental United States.
The Stop the Rail Merger Coalition, whose members include six state attorneys general, competing railroads, labour unions and agricultural and chemical industry groups, opposes the combination.
The coalition argues that creating a railroad controlling around 50% of the domestic rail freight market could weaken competition and increase transportation costs that would ultimately be passed on to consumers.
The group did not immediately respond to a request for comment regarding Union Pacific’s fuel surcharge figures.
Berkshire Hathaway-owned BNSF has also raised concerns about the proposed transaction. In an STB filing this month, the railroad argued that Union Pacific and Norfolk Southern would be the only beneficiaries of the deal, saying the combined operator “will have every incentive and opportunity to apply UP’s longstanding high-price strategies on a national scale.”
BNSF declined to provide further comment.
Fuel surcharge levels climb above previous record
Transportation companies in the U.S. typically calculate fuel surcharges using benchmarks such as the Department of Energy’s On-Highway Diesel Fuel price alongside proprietary formulas known as “trade factors.”
The practice has survived regulatory scrutiny and legal challenges over several decades.
“Rail fuel surcharges overall are up 43 cents a mile since March and now sit above the previous record from September 2008. That’s not a typo,” said Kyle Henzel, president and chief operating officer at shipping platform Ship.com.
Railroad fuel surcharges generally respond to movements in fuel prices with a delay of as much as two months. For example, the surcharge applied in March this year was calculated using January diesel prices, before the Iran war began.
That timing difference contributed to a contrasting result for Union Pacific during the first quarter.
First-half surcharges exceed Union Pacific fuel spending
Union Pacific collected $607.6 million in fuel surcharges during the first quarter, which was $34.8 million less than its actual fuel expenditure, according to its STB filing.
The picture reversed sharply during the following three months. Across the first and second quarters combined, Union Pacific generated $56.4 million more in surcharge revenue than it spent on fuel.
It was the only major U.S. railroad whose fuel surcharges exceeded its fuel expenses over the first six months of 2026.
The biggest contrast was with BNSF, Union Pacific’s principal competitor in the western United States. STB filings showed BNSF collected $658.1 million less through fuel surcharges than it spent on fuel during the first half of the year.
For comparison, Union Pacific generated total fuel surcharge revenue of $2.3 billion in 2025. That figure was $48 million below its total fuel expenditure for the year, according to the company’s regulatory filings.
Union Pacific stock price
