Atlantic Northeast Rails & Ports Article
STB: Analysis of Recent Demurrage Decisions
June 2, 2020
By:
Atlantic Northeast Rails & Ports
To address complaints from rail users regarding unfair and burdensome demurrage and accessorial practices and charges of Class I railroads (Carriers), the Surface Transportation Board (Board) issued three decisions on April 30. They are as follows:
Policy Statement
The Policy Statement provides information on factors the Board will consider when evaluating the reasonableness of demurrage and accessorial rules and charges in formal complaints filed with the Board. The Policy Statement is intended to provide guidance to parties to help resolve commercial disputes by informing stakeholders of the principles the Board will apply if the dispute comes before the Board. The overarching principle of the Policy Statement is that for demurrage and accessorial charges to be reasonable they must (1) serve to incentivize shippers and receivers to encourage the efficient use of rail assets and (2) promote “transparency, timeliness, and mutual accountability” by both Carriers and the shippers and receivers they serve. This does not mean that a Carrier is not entitled to assess such charges against shippers, only that they cannot be assessed for delays attributable to the railroad and outside of the shipper’s control. The Board declined to make any binding determinations as to the reasonableness of any particular rule, practice or charge, and the Policy Statement does not require uniformity from the Carriers with respect to their demurrage and accessorial rules and charges.
The Policy Statement will go into effect on May 30, 2020.
Final Rule – Third-Party Demurrage Billing
The final rule, which was sought by many shipper and warehouse parties, requires a Carrier to directly bill the shipper, rather than a warehouse, for demurrage occurring at destination. This requirement is conditioned upon there (1) being an agreement to that effect between the warehouse and the shipper, and (2) the agreement being communicated to the railroad. The final rule does not apply to Class II and Class III carriers; however, they are encouraged to comply to the extent they can.
The final rule amends 49 C.F.R. Part 1333 and will go into effect on June 20, 2020.
Supplemental Notice of Proposed Rulemaking – Demurrage Billing Generally
Last year, the Board issued a proposed rule to change demurrage billing practices. After considering the comments received, the Board is seeking additional public comment on requiring the following information in demurrage invoices:
- The date range covered by the invoice.
- The original estimated date and time of arrival of each car and when the car was actually received.
- The date and time each rail car is ordered in.
The supplemental notice also proposes requiring Carriers to provide machine-readable data and seeks comments on (1) how to make the data available to all rail users and (2) whether it would be unduly burdensome to Carriers.
The initial proposed rule includes a new regulation requiring Carriers take “appropriate action to ensure that demurrage charges are accurate and warranted” prior to issuing an invoice. The supplemental notice asks Carriers to explain the actions they currently take, and asks rail users to state what actions they believe should be taken, to ensure demurrage invoices are accurate and warranted.
Comments are due by June 5, 2020 and reply comments are due by July 6, 2020.
Shared with permission from Atlantic Northeast Rails & Ports. To request a sample issue, email editor@railsandports.com.