ARA TESTIFIES ON EXCESSIVE FREIGHT AND DEMURRAGE CHARGES, URGES STB TO HOLD RAILROADS ACCOUNTABLE
May 22 2019
On May 22, 2019, ARA testified before the Surface Transportation Board (STB) about excessive demurrage and accessorial charges against agricultural retailers and distributors.
ARA recommended that the agency allow for a more reasonable time frame (minimum 48 hours up to 96 hours) to load and unload shipments following shipping schedules created by the agricultural retailer and manufacturer as the current 24-hour time frame is too short. In addition, ARA recommended STSB require the railroads provide daily progress reports to the shipper and the receive so they know the exact location of the rail cards to increase compliance. Reciprocal demurrage charges should be imposed on the railroads to ensure commercial fairness and accountability.
In the testimony, ARA Senior Vice President of Public Policy and Counsel Richard Gupton told the STB that ARA members (ag retailers, distributors, and manufacturers) are continually impacted by poor rail service that includes bunching of rail cars and imposed high demurrage charges.
“ARA and its members believe the excessive charges being imposed by the Class 1 railroads are commercially unfair and lack appropriate reciprocity as it relates to non-performance by the railroads.” Gupton said. “The charges are well above and beyond the intent of the STB demurrage liability regulations that are designed to encourage efficient loading and unloading of product … ”
From ARA’s perspective, it appears the railroads are trying to generate income by any means possible. The largest driver of the demurrage charges relates to bunching as some cars sit in the yard for several days while additional cars arrive, and the railroads try to deliver them all at once.
“The railroad industry has changed dramatically over the past three decades. If the railroads are left to continue to operate in their present state and impose excessive freight rates and demurrage charges, the nation’s agricultural productivity will be negatively impacted, and consumers will be impacted by higher food costs.”
ARA thanks the STB for holding this important oversight hearing and looks forward to working with the agency and railroads to provide a more efficient system, commercial fairness, foster increase competition and accountability.
Click here to read ARA's testimony as prepared for the record.
Click here to view more information, including the witness lists. Video of the hearing will be uploaded when it is available.