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Rail regulatory board to hear shippers speak on demurrage and accesorial charges

Image courtesy of Jim Allen/FreightWaves

At least 35 groups will be testifying before the Surface Transportation Board (STB) this week to provide their perspective on how the Class I railroads assess demurrage and accessorial charges.

(Demurrage is issued when cargo exceeds time allotted sitting at a terminal. Accessorial charges are charges made for performing freight services beyond normal pickup and delivery.)

The topics have become controversial because some shippers say the changes that the Class I railroads have made in administering the charges are unfair. Because of the interest in the topic, the board will hear testimony for two days, May 22 and May 23, on whether changes need to be made in how the Class I railroads assess these charges.

The railroads that adopted precision scheduled railroading have also changed their policies on demurrage and accessorial charges, often upping fees and narrowing the window for how long a shipper can hold a railcar. The railroads argue that the changes are necessary because they provide a financial incentive for shippers and other parties to turn railcars around faster. The railroads have also said that some bulk shippers have used the railcars as storage units, and so prescribing these charges discourages that practice.

But shippers say the charges are unfair because sometimes the slower turnarounds are the fault of the railroad and not the shipper, and yet the shipper gets penalized but the railroad does not. Terminals also might not have the equipment or chassis available to help turn the railcars around at the time when the turnaround is scheduled. Possible themes that could be discussed at the two-day hearing this week include whether the railroads should also be penalized for not turning around railcars in a timely fashion and if the turnaround timeframe should be extended.

The groups testifying before the board this week include trade and shipper groups ranging from the American Chemistry Council to the National Industrial Transportation League, to terminal and warehouse operators such as Kinder Morgan to government groups such as the U.S. Department of Agriculture. In addition, representatives from the Class I railroads will also be testifying at the hearing. The witness list is available here.

Other parties have provided written comments to the STB, and those can be found by searching here and using proceeding number Ex Parte (EP) 754.

The hearing will not have a live video feed available, although a hearing transcript will be provided on STB’s website as soon as it is available.

After the board hears the comments, there are several actions that could occur next, according to former board chairman Dan Elliott. After reviewing all the comments, the board can take no action, put out an advanced notice of proposed rulemaking, use its investigative authority to dig deeper or set up a more informal process and track the railroads’ progress in making changes.

Elliott didn’t have a guess on which way the three-member board might decide. But they could take action sooner rather than later, instead of waiting for two additional board members to join their ranks.

“These three members seem ready to do something if need be,” Elliott said.

Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.