The Surface Transportation Board (STB) has released decisions that address how freight railroads apply demurrage and accessorial charges to rail shippers, providing some direction to stakeholders over the controversial practice.
The three decisions are: 1) a proposed policy statement on demurrage and accessorial charges that addresses shipper concerns such as free time, bunching, overlapping charges, invoicing and dispute resolution, credits, notice of major tariff changes and warehouseman availability;
2) a proposed rule on demurrage billing requirements in which the Class I railroads include information on their invoices that would assist shippers and receivers in verifying charges, determining who is responsible for delays and evaluating whether and how to expedite the handling of railcars; and
3) a proposed rule that seeks to clarify the regulations governing exemptions for how certain commodities, such as paper products, steel scrap and other commodities travel via boxcar. This proposed rule suggests that the exemptions that these commodities have do not apply to demurrage regulations, and it addresses some concerns raised by these commodities earlier this year.
These proposed actions are STB’s response to the complaints raised by rail shippers at a two-day public hearing in May. At the hearing, rail shippers expressed frustration over how the Class I railroads were levying demurrage and accessorial charges in recent months. The railroads argued that the charges and demurrage encourage shippers to handle railcars in a timely fashion. The railroads modified how they assessed these charges as a result of their decision to deploy precision scheduled railroading, an operating model that streamlines schedules and rail operations. But shippers say that the charges can unfairly penalize shippers when it’s actually the railroads causing the inefficient railcar handling.
The Board said it received over 90 pre-hearing submissions from stakeholders, heard testimony from dozens during Day 1 and Day 2 of the hearing, and it received 36 post-hearing comments. These comments can be found in the docket Ex Parte (EP) 754.
The STB will be seeking comments on these three decisions through November 6, and replies will be due by December 6.
Through these decisions, the Board is “continuing its efforts to improve dispute resolution processes, promote transparency, and make the agency more accessible,” STB said.
Comments on the proposed rule on demurrage billing requirements will be available under the docket, EP 759, and comments on the proposed rule on the exclusion of demurrage regulation from certain class exemptions will be available under the docket EP 760. Comments on the proposed policy statement will be available under EP 757.
Stakeholders are still reviewing STB’s decisions, but some shippers’ initial reactions seemed to be in favor of the Board’s direction.
The National Industrial Transportation League (NITL) “is pleased to see the decision from the STB on demurrage and accessorial charges, which is of keen interest to NITL members. We look forward to reviewing the materials and responding further. We’re grateful to the STB for the agency’s attention to and consideration of these issues,” said NITL executive director Jennifer Hedrick.
Another shippers’ group, the American Chemistry Council (ACC), said the Board’s proposed policy statement “is a very positive step forward.”
The proposed statement “addresses many of the concerns raised about excessive freight rail charges during the STB’s recent hearing and tracks, to a large degree, the key principles for commercial fairness that ACC presented in our testimony,” ACC said.