Railroad Demurrage Basics
Private Car Storage versus Demurrage
Most railroads use the term Demurrage when describing the charges for privately owned railcars sitting on railroad property too long and the charges for using railroad owned railcars too long (during loading or unloading). A few railroads use the term Private Car Storage for charges related to privately owned railcars and demurrage for the rest. Basically, you will be pretty safe if you refer to both charges as demurrage.
Demurrage for privately owned railcars is charged from constructive placement (if there is one) to actual placement. For railroad owned railcars, demurrage is charged from constructive placement, if there is one – if there isn’t, it starts with actual placement and ends with release.
Daily demurrage charges are lower for privately owned railcars (understandably) and charges often vary by activity (i.e. loading or unloading).
Constructive Placement versus Actual Placement
When the railroad tries to deliver a railcar and the customer cannot receive it for one reason or another, the railroad places it in CP or constructive placement status. This means that they are washing their hands of it and the demurrage clock is ticking. Actual placement or AP is when the railcar is placed or spotted on the customer’s property.
Most of the Class Is start the demurrage clock on 12:01am of the day following placement. If you return the railroad owned railcar or order in your private railcar at 12:02am, one day of demurrage has accrued. So if it is after 12:01am, you have until 11:59pm before another day is accrued.
Free versus Credit Days
A free day is a of day of grace, a particular day of the week or holiday where you are not charged demurrage. If you are given 2 free days to get your private load off of railroad tracks after it has been constructively placed and you order it in after just one day, you are assessed no charges. Credit days work a little differently. Using the same example, you would get 1 day of credit to apply to other demurrage charges. Note: the credits can usually only be applied to charges at the same location and the same activity (i.e. loading or unloading).
If a railcar is constructively placed and you order it in (by email, phone call, electronic means), they will credit the time between order in to actual placement against any accrued demurrage.
Disputing Demurrage Charges
Most Class Is require you to have on record the order in date/time, constructive placement date/time, actual placement date/time and release date/time in order to dispute a demurrage charge. Be sure that you have a way to capture this information. A database application is preferable because you can then call up the information very quickly when needed. Shameless plug time… Railcar Management System (RMS) can store these important dates automatically except for order in date/time, which needs to be entered manually.
The rule books that define railroad demurrage are large and intimidating. Most Class I railroads have smaller summaries of the main points. Here are some that I have found:
Burlington Northern Sante Fe (BNSF)
Canadian Pacific Railway (CPRS)
Canadian National Railway (CN)
Kansas City Southern (KCS)
Norfolk Southern (NS)
Union Pacific Railroad (UP)
I hope you have found this helpful. If you have any insights regarding railroad demurrage, please comment.
All the best,
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Most Class Is require you to have on record the order in date/time, constructive placement date/time, actual placement date/time and release date/time in order to dispute a demurrage charge. Be sure that you have a way to capture this information.
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