Class 1 Railroads Told to Report on Preparedness for post-pandemic Demands

Class 1 railroads have been instructed by U.S. Surface Transportation Board Chairman Martin Oberman to provide information about their preparedness to meet service demand as the nation continues to recovery economically from the COVID-19 pandemic.

In a letter to the railroad CEOs, Oberman said he was concerned about service problems reported by some shippers and expressed fear those issues might be related to a broader trend of rail labor reductions over the past several years, in addition to the furloughs and quarantines brought about by the pandemic.

The railroads were asked to provide information about the sufficiency of operating personnel and railroad equipment availability going forward, as well as longer-term expectations for hiring.

“The freight-rail industry has performed admirably during the COVID-19 pandemic and, as the nation’s economy recovers, I want to be fully informed as to the Class I railroads’ preparedness to meet forecasted demand, including the railroads having the necessary labor and equipment resources in place to provide safe, reliable and efficient service to customers,” Oberman wrote.

He acknowledged that the pandemic disrupted rail operations and lauded the carriers for their communication with the board and stakeholders during the past year.

On another matter, the STB also has asked Class I railroads to continue reporting revenues from demurrage and accessorial charges.

Regulators say that information has allowed them to monitor trends in such revenues.

“In light of the Board’s close oversight of Class I railroad rules and practices related to demurrage and accessorial charges, including our policy statement and final rules related to warehouseman liability and minimum requirements for demurrage bills, it is important for us to continue to receive quarterly updates on these revenue streams,” the STB said in a news release.

STB Rules on Demurrage, Accessorial Charges

The U.S. Surface Transportation Board this week released three decisions pertaining to demurrage and accessorial rules and charges.

In a final policy statement, the board said it has provided principles it will use in evaluating the reasonableness of demurrage and accessorial charges.

The policy states the the board intends to facilitate more effective private negotiations and problem solving between rail carriers and shippers and receivers, to help prevent disputes from arising, and to help resolve disputes more effectively and cost-effective manner.

In another decision the board issued a final rule that requires Class I railroads to directly bill the shipper for demurrage when the shipper and warehouseman agree to that arrangement and notify the carrier.

In explaining the rule the board said the rule is intended “to help ensure the responsibility for demurrage is placed on the party in the best position to expedite the loading or unloading of rail cars.”

In a notice of proposed rulemaking, the board said it will invite comments on certain modifications and additions to proposed requirements for minimum information to be included on or with Class I railroad demurrage invoices.

The final policy statement will be effective May 30 and the final rule in Demurrage Billing Requirements will be effective June 20. Comments on the supplemental notice of proposed rulemaking are due June 5.