According to Lineas, the largest private rail freight operator in Europe, 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.
“Everybody sees how energy prices are soaring when driving to the gas station. Rail companies are suffering massively, too. We cannot continue to be the only mode of transportation that doesn’t pass on the rising energy costs. This is surely true for privately owned businesses like us, but even for state-owned competitors, the solution cannot be that the taxpayer has to cover their rising energy bill. Therefore Lineas will apply a dynamic energy surcharge to be able to offer sustainable rail transport solutions.” said Lars Redeligx, Chief Commercial Officer at Lineas.
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. 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).
First dynamic energy surcharge for rail freight
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.