STB: Container bunching has created unfair demurrage practices; Precision Scheduled Railroading is the culprit

Written by Bill Wilson, Editor-in-Chief
freight containers
The Surface Transportation Board is reacting to three petitions dealing with precision scheduled railroading.

More railcars all at once might force the Surface Transportation Board (STB) to do something once and for all. For now, the STB is recommending shippers and railroad companies work together to calm tempers over demurrage practices. Precision Scheduled Railroading (PSR), which has lengthened train hauls and has put more pressure on shippers to move more within a 24-hour window, has resulted in three petitions being submitted to the STB.

The STB issued a policy statement placing blame on the railroad.

“Demurrage rules and changes are not reasonable when they do not serve to incentivize the behavior of shippers and receivers to encourage the efficient use of rail assets,” STB said in a statement. “In other words, charges should not be assessed in circumstances behind the shipper’s or receiver’s reasonable control. It follows, then, that revenue from demurrage charges should reflect reasonable financial incentives to advance the overarching purpose of demurrage and that revenue is not itself the purpose.”

Back in May the STB held a hearing with Class 1 railroad companies on demurrage policies. Shippers complained they were only given 24 hours to deal with longer lines of railcars. The bunching of containers is a byproduct of PSR. A large number of containers arrive in one day instead of a span of several days. The STB wants the shippers and railroad companies to work together on a solution because under the current situation “it has become difficult, if not impossible, to avoid demurrage charges following the recent reductions in free time, particularly in light of inconsistencies in rail service,” the STB said.

The STB did issue a proposed rule to require Class 1s to levy demurrage penalties to shippers and not warehousing companies.

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