By Randy Gordon, President and CEO
The two Canadian Class I rail carriers – the Canadian Pacific (CP) and Canadian National (CN) – in early February joined their U.S.-based brethren in submitting reports to the Surface Transportation Board (STB) detailing millions of dollars of earnings generated during 2018 through demurrage and accessorial charges assessed on rail customers.
CP reported generating a total of $43.77 million, $30.14 million of which were demurrage charges while $13.63 million were accessorial charges. Meanwhile, the CN reported accruing revenues totaling $30.18 million, of which $22.92 million were accessorial and $7.27 million were demurrage revenues. Both Canadian carriers lagged their U.S. counterparts, except for the Kansas City Southern, which earlier reported generating a total of $40.8 million through accessorial and demurrage charges. [See accompanying table.]
In his Feb. 4 letter to STB Chairman Ann Begeman, CP President and Chief Executive Officer Keith Creel stressed that a “large portion” of the growth in its demurrage revenues in 2018 were attributable to decisions by intermodal shippers to utilize a container storage program offered by CP.
Creel maintained that revenues generated by CP’s demurrage and accessorial charges represent 3 percent of its total operating revenues. “…[T]hese charges represent legitimate and reasonable charges for supplemental services and encouragement of the safe and efficient use of rail assets,” Creel wrote. “CP’s demurrage and accessorial-related rules are reasonably designed to facilitate transportation and an adequate car supply. They also contain balanced protections for shippers and receivers…These revenues do not drive our financial performance.”
Meanwhile, U.S. Regulatory Counsel Kathryn Gainey wrote in CN’s Feb. 1 statement that the carrier was providing the data on a “voluntary basis,” and implied that most of the accessorial revenue was generated by optional services requested by customers, although she also cited “other accessorial charges for items such as overloaded railcars, improper documentation or securing leaking railcars for dangerous goods.”
The reporting had been requested by Begeman, who directed that each of the Class I carriers also report 2019 earnings on a quarterly basis that are generated by demurrage and accessorial charges. Each of the carriers’ 2018 reports can be accessed from the STB website’s “non-docketed public correspondence” section by clicking here and reviewing the January and February 2019 filings.
The following table compares the demurrage and accessorial revenue generated by each of the Class I railroads in 2018:
2018 Demurrage, Accessorial Revenues Generated by Class I Railroads
|(In millions of Dollars; totals may not add due to rounding)|
|Kansas City Southern||29.3||11.5||40.8|
NGFA will continue to report on the 2019 quarterly filings on demurrage and accessorial charge revenues submitted by the Class I railroads to the STB.