WASHINGTON, DC, US — The US Surface Transportation Board (STB) issued on April 30 its final policy statement on demurrage and accessorial rules and charges on cases brought before the agency.
The final version mostly adheres to the proposed version that STB is unwilling to make “any binding determinations” through the policy statement. Specifically, the STB said it “declines at this time to take further regulatory action….However, the (agency) will remain open to argument that these concerns and suggestions should be considered in future proceedings in assessing the reasonableness of demurrage rules and charges….”
The National Grain and Feed Association (NGFA) had urged the STB to use this opportunity to rule prima facie that certain egregious demurrage and accessorial practices engaged in by some railroads inherently were unreasonable, and that carriers should be directed to conform their policies accordingly so that rail customers would not be forced to bring cases to the STB to seek redress for such practices.
“Through this policy statement, the (STB) expects to facilitate more effective private negotiations and problem-solving between rail carriers and shippers and receivers on issues concerning demurrage rules and charges, to help prevent unnecessary future issues and related disputes from arising; and, when they do arise, to help resolve them more efficiently and cost-effectively,” the STB said. “The (STB) encourages all carriers, and all shippers and receivers, to work toward collaborative, mutually beneficial solutions to resolve disputes on matters such as those raised” by rail users during the agency’s proceeding on this matter.
The STB policy statement covers the following major issues:
Free Time: The STB stated that it “continues to have serious concerns about the adverse impacts of carriers’ reductions in the amount of free time” granted to shippers and receivers to load and unload cars, “including the potentially negative consequences of providing no credit days for private cars if rail carriers do not have reasonable rules and practices for dealing with, among other things, variability in service and carrier-caused bunching (of rail cars), and for ensuring that rail users have a reasonable opportunity to evaluate their circumstances and order incoming cars before demurrage begins to accrue.” The STB noted that “carrier-caused circumstances that give rise to a situation in which it is beyond the rail user’s reasonable control to avoid charges” would not fulfill the overarching purpose of demurrage to foster efficient use of rail assets.
Bunching of Cars: The STB faulted rail carriers for not specifically describing when and how credits are awarded when they “bunch” cars at a rail customer’s facility and for not adequately addressing the concerns raised by shippers and receivers.
Accessorial Charges: The STB did respond to the NGFA’s request that it more clearly include accessorial charges in the policy statement. In so doing, the agency said, “many accessorial charges (all charges assessed by railroads other than the line-haul freight charge and demurrage) do not serve the same efficiency-enhancing purpose as demurrage.”
Overlapping Charges: The STB reiterated its draft policy statement’s language, but went further by clarifying that when adjudicating specific cases, “it would have significant concerns about the reasonableness of a tariff provision that sought to impose an overlapping charge intended to serve the same purpose as demurrage, or a charge arising from the assessment of demurrage for congestion or delay that is not within the reasonable control of the rail user to avoid.”
Invoicing and Dispute-Resolution: The STB said rail users should be able to review and, if necessary, dispute charges assessed on railroad invoices, and that carrier rules and practices should not “preclude a rail user from determining what occurred with respect to a particular demurrage charge….”
Credits: The policy statement reiterated that the STB is “troubled” by the lack of reciprocity between demurrage credits and charges, especially those that expire within an insufficient time that undermines their value.
Notice of Major Tariff Changes: The policy statement reiterated that “as a matter of commercial fairness…, railroads should provide sufficient notice of major changes to demurrage and accessorial tariffs to enable shippers and receivers to evaluate, plan and undertake any feasible, reasonable actions to avoid or mitigate new resulting charges.”