Shippers line up to testify on railroad demurrage charges

Interest leads federal regulators to add second day to upcoming hearing
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WASHINGTON — Railroads are likely to get an earful of opposition to their increased use of demurrage and accessorial charges at a federal regulatory hearing that has been expanded to a second day.

Three dozen shippers, logistics firms, and trade groups representing a wide range of railroad customers are scheduled to appear at the Surface Transportation Board’s oversight hearing on demurrage and accessorial charges, which the board on Friday said would now be scheduled for both May 22 and 23.

Executives from all seven Class I railroads are scheduled to speak at the hearing, as well.

The list of shippers scheduled to appear includes companies and trade associations representing virtually every carload commodity, including scrap metals, energy, chemicals, grain, paper, minerals, ethanol, plastics, and coal. A few household names are among those scheduled to speak, such as pasta maker Barilla and brewer MillerCoors.

CSX Transportation, the first U.S. Class I to adopt Precision Scheduled Railroading, began strictly enforcing its demurrage and accessorial charges under then-CEO E. Hunter Harrison in 2017.

Like CSX, Norfolk Southern and Union Pacific have also raised the charges levied on shippers who don’t load or unload freight cars quickly enough.

Railroad executives have said that the charges are designed to encourage shippers to turn freight cars more quickly, which reduces the number of cars needed and helps make rail networks more fluid. This, in turn, can make service more reliable.

The changes at NS and UP, which also have adopted PSR operating models, prompted STB Chairman Ann Begeman to write to the railroads’ chief executives in November.

Begeman wrote that she was concerned about the changes and wanted to ensure that the tariffs properly balance the interests of shippers and railroads and that they are commercially fair.

The board has increased its scrutiny of accessorial and demurrage charges since then. Begeman subsequently wrote to the chief executives of all seven Class I railroads in December and asked them to provide quarterly updates on revenue generated from the charges.

Several shippers have written to the STB to complain about the charges, which they view as unfair attempts to raise additional revenue.

The hearing will be held in the Main Hearing Room (Room 101) of the U.S. International Trade Commission, 500 E Street, S.W., Washington, D.C., near the STB headquarters.

The board is not providing a live stream of the event.

A list of speakers is available here.

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