railroad-demurrage-basics

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.

Demurrage Clock

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).

Ordering In

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.

Helpful links

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)

http://image.email.bnsf.com/lib/fefa1072766103/m/1/Demurrage+Tariff+Overview+2015_Final.pdf

 

Canadian Pacific Railway (CPRS)

http://www.cpr.ca/en/customer-resources-site/Documents/tariff-2-railcar-supplemental-services-may-2015.pdf

 

Canadian National Railway (CN)

https://www.cn.ca/en/news/2014/06/cn-9000-optional-services-carload-change-effective-july-15-2014

 

CSX (CSX)

https://www.csx.com/share/wwwcsx_mura/assets/File/Customers/Price_Lists_Tariffs_Fuel_Surcharge/DemurrageGuide%20for%201-1-15.pdf

 

Kansas City Southern (KCS)

http://www.kcsouthern.com/en-us/customer-resources/demurrage

http://www.kcsouthern.com/en-us/pdf/fuel-surcharge/demurrage-kcs-6000-F/demurage-kcs-6000-F-july152014.pdf

 

Norfolk Southern (NS)

http://www.nscorp.com/nscorphtml/pdf/demurrage_faq.pdf

http://www.nscorp.com/content/nscorp/en/transportation-terms/other-requirements/demurrage-rules-and-charges.html

Union Pacific Railroad (UP)

http://www.uprr.com/customers/myterms.shtml#4

 

I hope you have found this helpful. If you have any insights regarding railroad demurrage, please comment.

All the best,

Jim

Jim Dalrymple

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7 Comments

  1. Charles Fowlkes on May 24, 2013 at 6:19 am

    Good day Sir, I work for a cement comp & we get our cement by rail..Starting next week we will be
    doing demurrage on certin r/cars is there any forms for this where would I get them Thanking you in advance

    • Jim Dalrymple on May 24, 2013 at 9:36 am

      Hi Charles. Are you asking for a paper or electronic form that will help you with the demurrage calculations?

      • Charles Fowlkes on May 28, 2013 at 4:06 am

        Thanx for getting back to me so soon Canton r/road gave me a demurrage form but if you could give anything that you think would help I would apprecite it very much Charles

        • Jim Dalrymple on May 28, 2013 at 9:38 am

          Hi Charles. My company sells a software system that will estimate the demurrage charges. In order to use it for that, you need to have been accumulating sighting records (i.e. CLM – car location messages) in it for the period that you wish to estimate demurrage, so it is not going to solve your immediate need. For the future, please check this out.

    • David Miller on August 22, 2017 at 1:17 pm

      Hello Jim- Are you still involved with rail car demurrage subject matter?

      If so I could use some advice on finding out how to find out the billable figures on a monthly basis from UP and BNSF switchyards in Southern California-

      Thank you in advance

      • Jim Dalrymple on August 22, 2017 at 2:38 pm

        Hi David,

        If you are looking for how much your company owes for demurrage on BNSF / UP and for some free tools to manage demurrage, register for the free BNSF and UP railroad web sites. Here is an article that explains how to register.

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