Union Pacific Railroad will start imposing a $1,200 surcharge on customers moving crude with older model crude railcars.
According to documents seen by Reuters, the company told customers this week that as of August 1 it will charge shippers more if they are using DOT-111 railcars that don’t meet tougher industry standards adopted in 2011.
Shippers will be charged an additional $1,200, or about $1.71 per barrel, if they move crude using a 700 barrel DOT-111 railcar.
Union Pacific said the surcharge was prompted by tougher rules for transporting flammable liquids that were introduced after several crude tanker accidents over the past few years.
According to Union Pacific, the company moved 141,000 crude oil carloads in 2014.
In Janurary, BNSF Railway told its customers it will impose a $1,000 surcharge on shippers using DOT-111 railcars.
Shipping crude by rail was an especially popular option during the U.S. shale boom,
However, last year’s crude price rout sent oil by rail shipments falling by more than 1 million barrels per day from the fourth quarter of 2014 to April, Reuters said.
In May, the Department of Transportation unveiled stricter safety rules developed in coordination with Canadian officials for the transportation of crude by rail.
The new rules call for thicker shells on both new and existing tank cars, enhanced braking systems, operating speed cuts, more routing analysis and more accurate classifications of unrefined petroleum products.