What is demurrage? Demurrage is the charge assessed by a railroad when a patron uses an excessive amount of time to load or unload a car. Typically, this means taking longer than the 24 hours free time allowed to load a car after it has been placed, or longer than 48 hours free time for unloading, not including weekends and holidays. Demurrage as includes the charges for storing empty cars assigned to customers, as well as charges for holding cars containing hazardous commodities. Why is there demurrage? Demurrage serves as an incentive to load or unload cars quickly, thereby improving car utilization. It also helps offset car hire cost, which is the hourly rental and mileage expense railroads must pay to freight car owners- including other railroads, even when cars are under customer control. Where do the rules for demurrage come from? Railroad authority and regulations concerning demurrage come from the Interstate Commerce Commission, a federal regulatory agency given its power by Congress. Under transportation law, the ICC must approve certain charges for railroad service including demurrage, and specify how claims and / or disputes are to be handled. For this purpose, a single demurrage tariff ICC-RPS 6004 has been established, which contains each railroad's separate demurrage rules and is enforced by the ICC. Demurrage Basics The demurrage cycle begins with the placement of a freight car for loading or unloading. Demurrage does not stop until the railroad's Customer Service Center receives forwarding instructions for the car. The center's 24-hour, toll-free number is: (1-800-635-9449). The railroad cannot backdate the receipt time of forwarding instructions to the time that a car is completely loaded, unloaded, or when the instructions are prepared. Placement is considered to be either actual placement - the positioning of a freight car at destination, or constructive placement, which occurs when cars must be held awaiting the customer's special spotting instructions. A constructive placement notice is mailed whenever the customer is unable to accept the car. This most commonly occurs when there is no room on a siding.Another is failure to communicate special spotting instructions necessary for proper placement of the car for loading or unloading. After actual or constructive placement of a car, customers generally are allowed a full day (24 hours) of free time for loading, and two days (48 hours) for unloading. There is no free time for loaded cars handled from another railroad in their reciprocal switch service. As soon as free time expires, demurrage charges will continue including weekends and holidays until the railroad receives forwarding instructions for the car. If a car has been placed in the wrong spot for loading or unloading, the industry should call the Customer Service Center immediately and explain what has happened, indicating the car is "off-spot" and needs to be moved. This will relieve demurrage from the time the railroad receives advice of incorrect placement, until the time the car is correctly spotted. Private cars destined to private or leased tracks do not usually accrue demurrage charges. Loaded private cars, however, are subject to demurrage when constructively placed. Actual placement will stop the demurrage time clock. Private cars for loading and unloading at team tracks or other public delivery locations are subject to same demurrage rules as railroad-controlled cars. Allowances Allowances are tariff provisions for relief of demurrage charges due to a condition not attributable to the shipper or consignee. Allowances can be considered only be filing a claim for relief with the railroad. Two typical allowances involve bunching and runaround. Bunching is the accumulation and placement of cars for loading or unloading in excess of car orders, or contrary to customary schedules. Runarounds occur when the railroad does not place the oldest car first. When this happens, the customer may claim a runaround. For example, cars arrive on Monday for customer unloading, and then additional cars arrive on Tuesday for unloading. The cars that arrived on Monday should be spotted before the cars that arrived on Tuesday.
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