Surface Transportation Board issues decisions on demurrage and accessorial charges

A photograph of a train locomotive pulling railcars on a sunny day.

The Surface Transportation Board (STB) has made three decisions defining how the freight railroads can apply demurrage and accessorial charges.

The U.S. operations of all the Class I railroads except BNSF had adjusted how they apply the charges because they were deploying some form of precision scheduled railroading, an operating model that seeks to streamline operations and cust costs. The railroads said the adjustments would encourage shippers to turn around rail assets more efficiently. 

But shippers said the charges can be administered unfairly, especially if issues concerning the turn-around of assets were more the fault of the railroad. Shippers testified at a two-day hearing in May 2019, and the board has been in communication with shippers and railroads since then. STB issued another ruling on demurrage in early April.

Trade groups and rail industry observers are still absorbing the decisions, but a shippers’ group welcomed STB’s actions.                                                                                                   

STB says the decisions are part of a wider effort to “promote transparency, timeliness and mutual accountability by rail carriers and the shippers and receivers they serve.”

One decision is the issuance of a policy statement that STB says will provide the public with information on the principles that the Board would consider in evaluating the reasonableness of demurrage and accessorial rules and charges. STB hopes the policy statement will help rail carriers, shippers and receivers conduct more effective private negotiations when disputes arise. The statement is part of Ex Parte (EP) 757 and it is available here.

Another decision clarifies that the party responsible for demurrage should be the one in the best position to expedite the loading or unloading of railcars. The decision requires Class I carriers to directly bill the shipper for demurrage when the shipper and the warehouseman agree to that agreement and notify the carrier, STB said. This decision is found in the docket for demurrage billing requirements, EP 759. The decision is available here

The third decision entails the issuance of a supplemental notice of proposed rulemaking as part of EP 759. The board is seeking public comments on certain modifications and additions to the proposed requirements for what information should be included on or with Class I carriers’ demurrage invoices. According to STB, this additional information includes: “(1) the date range (i.e., the billing cycle) covered by the invoice; (2) the original estimated date and time of arrival and the date and time cars are received at interchange; (3) the ordered-in date and time; and (4) machine-readable data.”

The board is also asking Class I carriers to comment on what actions they currently take to ensure demurrage invoices are accurate and warranted, and it’s asking all stakeholders what actions Class I carriers should be required to take reasonably.

“The intent of this proceeding is to ensure that the recipients of demurrage invoices will be provided sufficient information to readily assess the validity of those charges without having to undertake an unreasonable effort to gather information,” said the board. The decision is available here.

STB said the final policy statement will be effective on May 30, 2020, and the final rule on demurrage billing requirements will be effective on June 20, 2020.  Comments on the supplemental proposed rulemaking are due by June 5, 2020, and replies are due by July 6, 2020.