ARLINGTON, Va., June 8, 2020 – The National Grain and Feed Association (NGFA) is urging the federal Surface Transportation Board (STB) to require the nation’s largest railroads to provide additional information to rail customers so they can better verify the accuracy of carriers’ demurrage bills.
In a statement submitted to the agency on June 5, NGFA stressed that Class I railroads’ invoices for demurrage and accessorial charges frequently are inaccurate, and impose “burdensome, tedious, time-consuming and costly efforts” on behalf of rail customers to investigate and challenge.
“Railroads generally have placed the sole burden on their customers to prove demurrage and accessorial charges (which generally are computer-generated based solely on train movement data) are not accurate or valid,” NGFA wrote. “Further, railroads have given themselves sole discretion to reject or modify an invoice that is subject to challenge” from a rail customer.
Data submitted to the STB by Class I rail carriers has shown that each generates millions of dollars each year through the imposition of demurrage charges.
Demurrage is designed to facilitate the efficient utilization of rail equipment, including locomotives, cars and track controlled by both railroads and their customers. In reality, agricultural shippers and receivers own or lease more than 80 percent of rail cars and virtually 100 percent of tank cars. However, demurrage charges are non-reciprocal in that they are assessed only by railroads against customers that do not load or unload cars within strict time limits imposed by carriers, often 24 hours or less. In many cases, NGFA has documented, the delays are attributable to lack of performance by railroads, including late placement of trains at facilities or so-called “bunching” of cars in quantities that exceed what the agricultural facility has requested or can load or unload efficiently.
In its statement, the NGFA supported the STB requiring railroads to provide additional specific minimum information to facilitate rail customers’ review of the accuracy of demurrage invoices. NGFA’s statement also identified additional information that it recommended should be required to be submitted by carriers, including the billing cycle covered by the demurrage invoice; the original estimated date and time of arrival of each car; the date and time the cars are actually placed for loading or unloading at the facility, as well as the date and time the cars are empty and ready to be pulled from the facility; and information on dates the cars were scheduled to be switched into a facility from a rail yard or interchange point.
NGFA also supported a requirement that the billing information provided by railroads to their customers be in a commonly used machine-readable format, such as Excel spreadsheets, and that the railroad provide a “concise explanation” of how each charge was calculated and the specific reasons for why it was being assessed.
In addition, NGFA recommended that railroads be required to inform the STB in writing of the specific steps each takes to ensure the accuracy of their invoices, with the agency making those reports publicly available on its website.
Finally, NGFA suggested that the STB’s Office of Rail Customer and Public Assistance create a portal on its website that rail customers could use to report incidents of erroneous invoices generated by railroads to facilitate transparency and the agency’s monitoring function. “NGFA believes the (STB) should communicate directly with senior management of any Class I carrier that exhibits a pattern of repeatedly generating inaccurate billings to discuss and determine corrective actions that should be taken,” NGFA said.
NGFA also encouraged the agency at some point to amend its recently issued Policy Statement on Demurrage and Accessorial Rules and Charges to recommend that rail carriers – particularly repeat offenders – provide unexpiring credits to their customers that successfully challenge erroneous invoices “to partially compensate them for the time, effort and cost expended in challenging such billings.”
Click here to access NGFA’s statement.
NGFA, established in 1896, consists of more than 1,000 grain, feed, processing, exporting and other grain-related companies that operate more than 7,000 facilities and handle more than 70 percent of all U.S. grains and oilseeds. Its membership includes grain elevators; feed and feed ingredient manufacturers; biofuels companies; grain and oilseed processors and millers; exporters; livestock and poultry integrators; and associated firms that provide goods and services to the nation’s grain, feed and processing industry. NGFA also consists of 33 affiliated State and Regional Grain and Feed Associations, and NGFA is co-located and has a strategic alliance with North American Export Grain Association, and a strategic alliance with Pet Food Institute.