By Randy Gordon, President and Chief Executive Officer
The NGFA earlier this month voiced strong support for Surface Transportation Board (STB) Chairman Ann Begeman’s efforts to focus on tariff rules of several Class I railroads that are imposing rapidly changing and increasingly higher demurrage and accessorial charges.
“Your efforts dating back to November 2018 calling on Class I railroads to examine their demurrage and accessorial charges from the standpoint of commercial fairness and appropriate reciprocity is welcomed by NGFA and rail customers, and is greatly needed,” the NGFA said in a March 5 letter. “So too are your actions to increase transparency on the extent to which Class I carriers now are generating significant additional revenues through these practices.”
The NGFA noted in its letter to Begeman that financial reports submitted in response to her request showed that the seven Class I railroads generated $3.2 billion in revenue in 2018 alone through demurrage and accessorial charges imposed on rail customers. Begeman has requested that carriers continue to report such revenues on a quarterly basis in 2019, and the NGFA requested that she extend such reporting into 2020 and future years.
“In many cases, NGFA members believe that the level of charges and the rules under which they are being imposed are commercially unfair and lack appropriate reciprocity when it comes to non-performance by rail carriers, and far exceed what is necessary to achieve the stated purpose of encouraging the efficient utilization of rail assets,” the NGFA wrote. “Instead, NGFA members believe many Class I carriers increasingly are using demurrage and accessorial charges as a significant additional revenue source to reward shareholders and Wall Street investors as they implement various versions of the so-called ‘precision-scheduled-railroad’ operating model.
“These are hugely important matters for agricultural and other rail customers,” the NGFA concluded. “The NGFA looks forward to providing (to the STB) numerous carrier-specific examples of commercially unfair and nonreciprocal demurrage and accessorial charges in the near future.”