Demurrage and detention from a carload perspective
The terms Demurrage and Detention are used quite a bit in the rail industry. Sometimes they seem to be used interchangeably or used differently depending on the type of rail shipping (i.e. intermodal vs. carload). If you have ever wondered about the meaning and usage of these terms particularly within the context of carload shipping, please read on.
It may be easiest to first outline the two most common carload situations that trigger the use of these terms:
Scenario 1: The time that a railcar, either rail-controlled or private, sits in the railroad yard after the railroad tried to deliver the railcar to the customer (constructive placement) until the railroad can place the railcar onto the customer’s property or industry (actual placement).
Scenario 2: The time that a rail-controlled railcar is held after the railroad delivers it to the customer at a spot on the customer’s industry (actual placement) to when the customer notifies the railroad that the railcar is available to be picked up (release).
Most Class I railroads use the term Demurrage to officially label fees associated with the scenarios mentioned above. There is one exception I have found so far: CSX uses the term Private Railcar Storage to label scenario 1 when an industry-controlled (aka private) railcar sits in the railroad yard after the railroad tried to deliver it to the customer.
Detention appears as an official line-item term in the world of container and trailer shipping (aka intermodal). It describes the time that a shipper or consignee hold onto a container before giving it back to the carrier. Take a look at this article about demurrage and detention from an intermodal perspective. In the bulk rail world, detention is used as well, but as a descriptive term related to the official term of Demurrage. For example, in the BNSF Glossary of Railroad Terminology & Jargon, it offers two definitions of Demurrage including the term detention:
- A penalty charge assessed by railroads for the detention of cars by shippers or receivers of freight beyond a specified free time
- Detention of a railcar by the shipper or receiver beyond the time allowed for loading, unloading
If you have come across other uses of these terms related to carload shipping, please comment. Thank you for reading!
All the best,