STB proposes new policy, rules for rail demurrage charges

The Surface Transportation Board (STB) yesterday released three decisions that address how freight railroads apply demurrage and accessorial charges to rail shippers.

The decisions are aimed at improving the dispute resolution process between shippers and railroads; promoting transparency; and making the agency more accessible, STB officials said in a press release.

The decisions involved are:
• a proposed policy statement to facilitate more effective problem solving between railroads, shippers and receivers by providing information on principles the STB would consider in evaluating the reasonableness of demurrage and accessorial rules and charges;
• a proposed rule to enhance the transparency and accuracy of demurrage invoices; and
• a proposed rule to make unambiguous that the regulation of demurrage is not excluded for exempt miscellaneous commodities and boxcar transportation, and to treat the exemption for certain agricultural commodities similarly.

The decisions were issued to address matters arising from the STB's two-day public hearing in May on railroad demurrage and accessorial charges. The hearing was held in response to significant changes that the Class Is have recently made to their demurrage and accessorial rules and charges.

"In testimony and in written comments, shippers, receivers, and others expressed concern about the commercial fairness, reciprocity and feasibility of the recent changes to demurrage and accessorial rules and charges being implemented by the Class I railroads," STB officials said.

Comments on the proposed policy statement, the demurrage billing rule and demurrage exclusion rule are due Nov. 6, with replies due by Dec. 6.

Meanwhile, an organization representing fertilizer shippers welcomed the STB's announcement.

"The fertilizer industry appreciates the board's attention to demurrage and accessorial charges, which have increased a great deal since the rail industry implemented precision scheduled railroading," said Chris Jahn, president and chief executive officer of The Fertilizer Institute.

The recently implemented charges are "completely unfair and unreasonable when shippers are unable to avoid them due to new rail carrier operating procedures, poor rail service, 'bunching' of cars, or other factors," Jahn added.