RR 500 Impact of Railroad Rule Tariffs, Demurrage and Accessorial Charges. Southwest Association of Rail Shippers Galveston, TX February 18-20, 2015
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1 RR 500 Impact of Railroad Rule Tariffs, Demurrage and Accessorial Charges Southwest Association of Rail Shippers Galveston, TX February 18-20, 2015
2 HISTORY OF RAIL REGULATION Interstate Commerce Act passed February 4, 1887 Established the 1 st Federal Regulatory Agency National Transportation Policy 3-R Act and 4-R Act in the mid-70 s Staggers Rail Act in October, 1980 IC Termination Act in December, 1995
3 Types of Rail Tariffs Rate Tariffs Rules Tariffs Mileage Tariffs Switching Tariffs Accessorial Tariffs-may contain demurrage or switching tariffs Transit tariffs Tariff Examples-Prosperity Rate Tariff 3
4 PTRA CREDIT TERMS PTRA 2000-B Item 110 Credit and Collection Terms- Unless otherwise provided in an applicable rate document the credit and collections terms for the PTRA are as follows. 1) Bills are due and payable on receipt. 2) All charges must be contested, in writing, within 45 days. Bills not contested within 45 days will be due in full. 3) PTRA s credit period shall not exceed 30 days from date of invoice, after which a service charge of 12% per annum will apply to all customers. 4) Invoice or BOL Numbers must accompany payments. 4
5 WHAT ARE TARIFFS AND WHY SHOULD I BE CONCERNED? Prior to the IC Termination Act, the ICC or state agency, i.e. RCT of Texas, approved rail pricing and they were published in tariffs. Based on the Filed Rate Doctrine, only legally, published and filed rates were valid charges. Tariffs had to be filed with the ICC in Washington, DC, PRIOR to becoming effective. Following the Staggers Rail Act in 1980, economic regulation of railroads was eased.
6 UP Cargo Liability-UP 6600-D Item 123-A CARMACK LIABILITY 49 U.S.C. Section provides for full value liability and other liability terms for the rail carrier and the Shipper. In order for a shipment to be subject to the terms of 49 U.S.C. Section 11706, the Shipper must comply with all of the following provisions. 1. Shipper must notify rail carrier no less than seventy-two (72) hours before the shipment is released for transportation that the shipper chooses Carmack Liability protections. 2. The shipper must have prepaid the Carmack Liability rate of the usual tariff or circular rate plus 250%, unless special pricing authority is obtained by contacting Union Pacific Railroad Damage Prevention Services as described in Item The shipping instructions must note (1) that the shipment is moving under 49 U.S.C. Section liability terms, and (2) that the shipment is subject to a specific pricing authority which shall be noted. 4. Carmack liability coverage is not available for shipments that originate in Mexico. 6
7 49 U.S. Code Liability of Rail Carriers under Receipts and Bills of Lading (a) A rail carrier providing transportation or service subject to the jurisdiction of the Board under this part shall issue a receipt or bill of lading for property it receives for transportation under this part. That rail carrier and any other carrier that delivers the property and is providing transportation or service subject to the jurisdiction of the Board under this part are liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this subsection is for the actual loss or injury 7
8 BNSF 6100-A Item Offer Of Section ('Carmack') Liability BNSF offers the opportunity to ship temperature controlled commodities (Rules 705 and 710) pursuant to the terms and conditions of 49 U.S.C. Section (Carmack) liability, as an alternative to the claims provisions in this BNSF Rules Book, BNSF-6100 Series. Shipments made pursuant to the claim provisions of Section (Carmack) will be charged a higher rate, and the following conditions must be met in full: (1) Not later than the time a car is ordered for loading the shipper must notify BNSF or its designated representative of the intention to make the shipment subject to the claim provision of 49 U.S.C. Section (Carmack). At that time the shipper must advise BNSF where and when the car will be available for BNSF representatives to inspect the loading and the loading method. 8
9 BNSF 6100-A Item Offer Of Section ('Carmack') Liability (cont d) (2) The shipping order and receipt must be endorsed prior to the shipment, "The Shipment is subject to the Claim Terms of 49 U.S.C. Section " (3) Transportation charges must be prepaid. Unless the shipper complies in full with the conditions stated above for application of Section liability, the shipment will be conclusively deemed to move under the 'alternate liability' terms and conditions of BNSF Rules Book, BNSF-6100 Series, and there will be a conclusive presumption that the shipper has given his written declaration and/or that the shipper and carrier have entered into a written agreement to this effect. 9
10 PTRA LIABILITY RULES-ITEM 140 DAMAGED CARS Industry is liable for rail cars delivered to or in the custody of Industry whether such cars are owned by a railroad or otherwise, and in the event of destruction of or damage to said cars for any reason, Industry shall pay the cost of replacement or repairs of such destruction or damage upon presentation of PTRA's invoice for said repair Rail cars will be considered as delivered o and fn the custody of Industry once placed at customer's track. Cars shall be considered delivered to and in custody of PTRA from the time said cars are coupled into by PTRA locomotives. 10
11 UP 6600-D Item: 98-A Overcharge Claim Rules Claims for overpayments (including duplicate payments) for freight charges must be filed in writing within twelve (12) months from the date of the original freight bill. Suits for the recovery of overpayments of freight charges may not be instituted later than two (2) years from the date of the original freight bill. Overpayment claims or lawsuits for less than $ per freight bill shall not be filed and no claim shall be paid if the overpayment is found to be under $ per freight bill. 11
12 UP 6004-C Item: 9635-A RAILROAD DELIVERS NO RAILCAR If the customer orders in a specific railcar for actual placement and the railroad doesn t actually place any railcars, the customer will receive two (2) placement credits for each car requested.
13 KCS Glossary of Demurrage Terms AVERAGE AGREEMENT: A written agreement between KCS and the party responsible for demurrage or storage charges, as described in 49 CFR Part 1333, providing for an offset of car detention Debits with Credits on a monthly basis. BUNCHING: The accumulation of cars for Loading or Unloading shipped on different days.. CONSTRUCTIVE PLACEMENT: When a car cannot be actually placed because of any condition attributed to Consignee or Consignor, car will be held at a location convenient to railroad operations awaiting Disposition instructions and notice of Constructive Placement given to the Consignee or Consignor of record. Consignee or Consignor will be required to Order In cars in Constructive Placement status. CREDIT: Offset of a Chargeable Day. Credits can be earned only on those cars Released from demurrage. DEBIT: See description of term for Demurrage Day. 13
14 KCS Glossary of Demurrage Terms (cont d) DEMURRAGE DAY: A twenty-four (24) hour period, or fraction thereof, commencing at the first 07:01 AM after placement or Tender, as defined in this Item, may also be referred to as Debit. PRIVATE TRACK: Any track not owned or leased by a railroad. PUBLIC DELIVERY TRACK: Any track for use by the general public for Loading and Unloading (i.e. Team Track) SPOT ON ARRIVAL: KCS, without Notification, will place cars for Loading or Unloading immediately upon their availability for placement. 14
15 ASSET USE CN 9000-U Item 9000 The CN defines demurrage as Asset Use. Our linehaul rates include the movement of your shipment from origin to destination and include time or credits for loading and unloading cars. If you load or unload cars in less than the allocated time, you may use the remaining credits to offset debits (asset use time) during the period. Extended asset use fees are assessed when net debits exceed credits during a service period. For billing purposes, a service period is one week. Asset use time starts at 00:01 after: placement or notification of constructive placement; notice of availability, or hold or notice of being held. On the occasions where we are unable to deliver the railcars as requested, and as a result you must exceed the amount of time we provide for loading and unloading, we will work with you to make it right. It s part of our commitment to customer service, continuous improvement, and doing the right thing. 15
16 KCS Computation of Demurrage Time A. Demurrage Computation: 1. Constructive Placement Time will apply from the first 07:01 AM after Constructive Placement until Order In Time or Actual Placement if there is no Order In Time. 2. Industry Time will apply from the first 07:01 AM after Actual Placement until Release. 3. Demurrage will apply from the first 07:01 AM after Constructive Placement of loaded and empty Private Cars while held on railroad tracks until request for placement (Order In) on Private Track is received. 4. Demurrage will apply from the first 07:01 AM after Release and removal of loaded Private Cars from Private Track until Forwarding Instructions are received. B. If an empty car is placed prior to date for which is was ordered, demurrage will apply from the first 07:01 AM of the date for which it was ordered. Demurrage Days will then accrue until the car is Released. C. On reloaded cars, demurrage will apply from the first 07:01 AM after advice is received that the car is empty until car is Released as a load; provided if advice that the car is empty is not furnished, demurrage will continue until Forwarding Instructions are received. 16
17 UP 6004-C Item 2110-A FREE TIME Free time as designated will be allowed for each car: (Except as otherwise provided herein.) FORTY-EIGHT (48) HOURS Complete unloading as defined in Items TWENTY-FOUR (24) HOURS 1. Partial or complete loading as defined in Items Partial unloading as defined in Items Partial unloading and reloading. 4. Loading or unloading all commodities handled in intraplant switching service as defined in the switching or other tariff's of this railroad and will include "set-back service" as defined in tariffs of this railroad. 5. Diversions, Reconsignments or Reshipment. 6. Held in transit: A. On order of consignor, consignee or owner of the freight. B. For surrender of order notify bill of lading or payment of lawful charges. C. Grain inspection - Exception: See Item D. Freight in bond for customs entry, Government inspection, or certification. Free time will be computed from the first 12:00 midnight after placement, or after proper notification has been sent or given where required. For the purpose of computing free time, Sundays and holidays will be excluded. EXCEPTION 1: Carload shipments of commodities taking Standard Transportation Commodity Code 24-series held for Diversion or Reconsignment shall not be allowed any free time. 17
18 UP 6004-C Item: 9600-B DEMURRAGE GENERAL APPLICATION A. Railroad and privately-owned cars held for or by Consignors, Loading Parties, Care of Parties and Receivers of rail cars will be subject to Chargeable Events rules and charges in this section for loading and unloading except as otherwise provided. B. The value of the debit and/or credit in effect on the date of the reported event will be used to calculate charges in this Tariff. C. Credits earned and debit days accrued by customers having two or more facilities at the same or separate stations cannot be combined. D. Credits earned on the loading cycle can ONLY be used to offset loading debits. E. Credits earned on the unloading cycle can ONLY be used to offset the unloading debits. F. Applies on all domestic and import traffic G. The provisions of this section will also apply to shipments of classes A, B, or C explosives, as named in Part 172 Commodity List of Tariff BOE 6000-series, and hazardous materials, substances, or wastes requiring the use of a 4-digit identification number on shipping papers, placards or panels, as named in Part 11, Section of Tariff BOE 6000-series, while held in cars on railroad premises. 18
19 UP 6004-C Item: 9610 CALCULATION OF CHARGEABLE EVENT CHARGE Chargeable Events will calculate daily demurrage charges as debits less total credits multiplied by the rate in Item The total monthly balance due will be the addition of all daily charges in a given calendar month. Excess credits earned in one calendar month will not offset debits earned in another calendar month. No refund of excess credits will be made by this railroad. 19
20 Demurrage Debit Rates Daily Demurrage Rates vary from carrier to carrier: BNSF $75 (Currently)-$150 (Effective ) CN $100 KCS $90 NOPB $75 PTRA $140/$195 UP $100 20
21 ExParte 707-DEMURRAGE LIABILITY Effective July 15, 2014 Adopted final rules establishing that the person receiving rail cars will generally be responsible for paying demurrage. Previously, the most important factor was whether the warehouseman, who does not own the goods and is not named as the consignee or consignor, is the responsible party for demurrage charges. 21
22 STEPS TO MANAGE DEMURRAGE COSTS To avoid paying undue charges, have a demurrage process to document rail switching services. Without rail car ordering and placement records, you have, basically, NO defense to avoid demurrage charges. Rule #1-Know your rail carrier s demurrage rules! Rule #2-Track daily rail orders and switching records. Rule #3-Review and audit rail demurrage bills. 22
23 UP 6600-D Item 124-A FREIGHT LOSS AND DAMAGE LAWSUITS A. All lawsuits must be filed within eighteen (18) months from the actual, or in the event of loss of shipment, from the expected date of delivery by Railroad. B. All lawsuits for freight loss or damage must be filed in the United States District Court in Omaha. Nebraska. 23
24 What can Shipper s Do to Protect Their Interests? 1. Read and be familiar with your Rail Carrier s cargo liability limits. 2. Non-rail related, but know the difference between cargo liability and insurance liability limits. 3. Consider Shipper s Interest Insurance-T&LC. 4. Liability limits may also be shown in rail pricing documents. 24
25 UP 4912-H GENERAL APPLICATION RULES FOR ITEM 5000-FD 1. Price applies in United States funds. 2. Applies in AAR Car Type T, tank cars. 3. Mileage allowance payment on private equipment will not apply. 4. Applies in Customer/Shipper-owned or -leased equipment bearing private (non-railcarrier) reporting marks. 5. Price may not be used in accordance with the provisions of Railway Accounting Rule 11 for the portion of the shipment prior to specified origin. 6. Price may not be used in accordance with the provisions of Railway Accounting Rule 11 for the portion of the shipment subsequent to specified destination. 7. Price is subject to Tariff UP 6007 (series), item 695 (series). 8. Price is subject to change on 30 day(s) notice. 9. Applies when the car capacity is not less than 1 Gallons but not more than 34,500 Gallons. 25
26 Switching Definitions-UP 6004-C Item 9015-C INTRA-PLANT SWITCHING - A movement from one track to another, or between two points on the same track, within the confines of the same plant or industry without leaving tracks of the industry. INTRA-TERMINAL SWITCHING - A movement (other than Intra-Plant switching), from a track, industry or firm to another track, industry or firm on the same road within the switching limits of one station or industrial district. INTER-TERMINAL SWITCHING - A movement from a track of one road to a track of another road, or between a track, industry or firm on the UP and a track, industry or firm on connecting road, when such tracks are within the limits of the same station or industrial switching district. INTERMEDIATE SWITCHING - A movement between interchange tracks of one carrier to interchange tracks of another carrier, when such tracks are within the limits of the same station or industrial switching district. 26
27 CN Switching Rules CN 9000-U RAILCARS UNABLE TO PLACE Item 6200 If a consignee is unable to accept cars that were ordered in by the consignee or spot-on-arrival and inturn,cn needstobringcars backtotheyard. $160 per railcar Responsibily: consignee 27
28 BNSF Plan to Roll FSC into Line-haul Rates The BNSF announced that beginning this month, February, 2015, they would begin rolling Fuel Surcharge costs into their line-haul rates and eliminate the itemized Fuel Surcharge cost on freight bills. 28
29 INTERMEDIATE APPLICATION UP 6600-D Item: 80-A Rates will not apply from or to points intermediate to the origins and destinations specified in the Agreement. 29
30 SUMMARY Register and create a log-in through all of your rail carriers websites. Secure copies of your rail carrier s tariffs, including their Rate and Rules Tariffs. Most of the Class I s Demurrage can be tracked through their website. Subscribe to your rail carrier s announcements and rate changes AND READ THEM! Rail contracts make reference to governing tariffs. Know what they are and how they impact your costs. Be an Informed Shipper! 30
31 THANK YOU! 31
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