Warehouse operators push for solution to reduce demurrage charges
Third party logistics providers are seeking the blessing of the U.S. Surface Transportation Board to expand a pilot program designed to fairly assign charges levied by railroads for exceeding the allowable time for loading or unloading a rail car.
The Association for Logistics Outsourcing, better known as the International Warehouse Logistics Association, said it and several member companies met last week with STB Chairman Roger Nober to brief him on problems related to so-called detention and demurrage policies. 3PLs say it is unfair to penalize them when factors beyond their control often dictate whether a warehouse can unload freight cars in the allotted time. Paying the charges or defending against them can cost shippers and their logistics providers hundreds of thousands of dollars, the trade group said.
Detention and demurrage also is a sore point between port terminal operators and railroads on the one hand, and truckers and shippers on the other when containers lay too long at the terminal awaiting pickup or at the shipper’s premises following delivery.
The ILWA said it wants to go nationwide with a program developed by one its member 3PLs and a major railroad in which demurrage charges are waived if the warehouse operator meets certain performance requirements, such as taking charge of a certain number of railcars per day.
“We aren’t asking for legal or legislative remedies,” ILWA President Joel Hoiland said in a statement. “They take too long to enact and cost too much to implement. IWLA members are committed to the free market and believe that a voluntary, cooperative program … will benefit all parties concerned.”
The association reported that Nober encouraged them to find out if other Class I railroads would be willing to adopt similar arrangements. Nober “also indicated that the STB might formally investigate the issue of demurrage if it determines this to be a chronic problem in the industry,” the ILWA said.