STB to Class I’s: Keep Reporting Demurrage, Accessorial Charge Revenues

The Surface Transportation Board (STB) on May 28 sent identical letters to the Class I railroad CEOs—the second set of letters in as many days—requesting that they continue providing quarterly information about their revenues from demurrage and accessorial charges.

STB Chairman Martin J. Oberman in letters dated May 27 called on the chief executives to provide an update on their preparedness to meet service demands, particularly as railroad employment rates have fallen.

The STB first requested information on revenues from demurrage and accessorial charges in 2018. The information allows it to “closely monitor trends … which remain important as shippers add volume back to the freight rail network with the rebound from the COVID-19 pandemic,” STB reported on May 28.

“In light of the Board’s close oversight of Class I railroad rules and practices related to demurrage and accessorial charges, including our policy statement and final rules related to warehouseman liability and minimum requirements for demurrage bills, it is important for us to continue to receive quarterly updates on these revenue streams,” Chairman Oberman said in a statement announcing the most recent letters’ release (see full letter text below).

In April 2021, STB adopted a final rule in Demurrage Billing Requirements, Docket No. EP 759 establishing certain minimum information requirements for demurrage bills from Class I’s, including among other things, billing cycle, shipment, car placement, and credit and debit information.

The new rule “brought a welcome change for U.S. freight rail shippers, who previously had been subject to frequent and ambiguous demurrage charges from the railroads amounting to billions of dollars,” American Fuel and Petrochemical Manufacturers Vice President Rob Benedict wrote earlier this month in a Railway Age editorial. “In 2020 alone, Class I rail carriers levied almost $1.4 billion in demurrage fees on rail shippers.”

All five STB members—Oberman (Democrat); Robert E. Primus, Vice Chair (Democrat); Ann D. Begeman, Member (Republican); Patrick J. Fuchs, Member (Republican); and Michelle A. Schultz, Member (Republican)—signed the identical May 28 letters.

Those letters were submitted to Katie Farmer, BNSF; Keith Creel, Canadian Pacific; JJ Ruest, CN; James Foote, CSX; Patrick Ottensmeyer, Kansas City Southern; James Squires, Norfolk Southern; and Lance Fritz, Union Pacific. The text, in its entirety, follows:

“As you know, the Board has been actively monitoring each Class I railroad’s quarterly revenues from demurrage and accessorial charges. Each carrier has reported this information since it was first requested by the Board in December 2018, for each quarter of 2018 through 2019, and then renewed through 2020. The quarterly submissions are posted on the Board’s website and available for public review.

“By this letter, we are asking each Class I railroad to continue to submit its quarterly revenues from demurrage and accessorial charges for 2021, in the same manner as originally requested. For the first quarter of 2021, please provide this information as soon as reasonably practicable. This information has facilitated transparency and allowed the Board to closely monitor trends in demurrage and accessorial charge revenue, which remain particularly relevant as freight rail volumes rebound from the COVID-19 pandemic.

“Thank you for your attention to this request. If you or your staff have any questions, please contact us or Mr. Michael Higgins, Acting Director of the Board’s Office of Public Assistance, Governmental Affairs, and Compliance, at 202-245-0238.”

In other developments, President Joe Biden recently nominate Democrat Karen J. Hedlund, current Vice President and National Rail Strategy Advisor at WSP USA and former Federal Railroad Administration Deputy Administrator, to replace Republican Begeman, whose term expired Dec. 31, 2020.