STB issues policy announcement on railroad demurrage charge practices

By Bruce Abbe, strategic adviser for trade and transportation

Demurrage charges have long been a source of raw conflict between transportation providers and shippers.

That conflict is not only over the recent spate of penalty fees by ocean container carriers that shippers have called unfair due to poor execution of cancelled sailings. There has also been a challenge from railroads assessing demurrage and accessorial charges on (non-intermodal) rail shippers. Charge amounts and applications have increased in recent years as Class 1 railroads have shifted to more precision-scheduled-railroad operations.

On April 30, the U.S. Surface Transportation Board (STB) issued a policy statement on three decisions related to how it will look at the reasonableness of railroad demurrage and accessorial charges, if rail shippers decide to bring a case before it.

The policy statement says STB is unwilling at this time to make “any binding determinations” and “declines at this time to take further regulatory action. … However, the (agency) will remain open to argument that these concerns and suggestions should be considered in future proceedings in assessing the reasonableness of demurrage rules and charges.”

The National Grain and Feed Association (NGFA) was among a group of shipper interest groups that has been pressing STB to take firm action to sort out and mitigate unfair application of demurrage charges.

NFGA President Randy Gordon wrote a detailed overview of the STB’s policy statement, including STB positions on free time, “bunching” of cars, accessorial charges, overlapping charges and invoicing and dispute-resolution.”

The STB said, “With the policy statement, the Board intends to facilitate more effective private negotiations and problem solving between rail carriers and shippers and receivers, to help prevent disputes from arising, and to help resolve disputes more efficiently and cost-effectively.

“The (STB) encourages all carriers, and all shippers and receivers, to work toward collaborative, mutually beneficial solutions to resolve disputes on matters such as those raised” by rail users during the agency’s proceeding on this matter.”

Another report on the announcement can be found here.