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STB Issues Guidance on Demurrage

Grain represented about 9% of railroads’ total originated tonnage in 2018

Rails 3633518 1920

On April 30, the Surface Transportation Board (STB) issued three decisions regarding demurrage and accessorial charges.

Railroads charge demurrage when excessive time is taken to load or unload rail cars. In one decision (effective May 30, 2020), STB clarified the principles it considers in evaluating the reasonableness of demurrage and accessorial rules and charges.

For instance, STB stated that demurrage charges based on factors outside shippers’ control do not fit the legitimate intent of incentivizing efficient handling of rail cars.

In a second STB decision, a final rule (effective June 20, 2020) specified billing requirements for demurrage when third parties are involved.

Finally, STB invited parties to comment on minimum information to be included on Class I carriers’ demurrage invoices. Comments are due by June 5, 2020, for the first round and July 6, 2020, for the reply round.

According to the Association of American Railroads, grain represented about 9% of railroads’ total originated tonnage in 2018.

Information provided by the USDA Grain Transportation Report.

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