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OK Tim, this is for you: This thread is designed to specifically discuss demurrage and may be dry to some, but it is a request. Just so you'll know! Demurrage is a miscellaneous charge, supported by tariff, made by railroads to customers to encourage the expeditious loading or unloading of rail cars. There are 3 basic types; straight plan, average agreement and special. Some roads refer to special demurrage as incentive demurrage, Straight plan is recorded and charged on a car for car basis. It is the plan most often used by those customers who do not receive a large number of cars and do not have their own siding. They would be using what is known as a team track sometimes known as public sidings. Public sidings are just what the name implies. A track that can be used by anyone receiving or shipping a railcar. Each demurrage type is subdivided into at least two parts, inbound and outbound. Incentive demurrage can have many facets, but we'll talk more about that later. In all demurrage, there is a specific amount of "free time", that period allowed a customer to load or unload without charge. It is usually 24 or 48 hours, exclusive of weekends and holidays if they fall at the beginning in the middle of or at the end of free time. Free time begins at the first 7:00 am, exclusive of weekends and hoidays, after the car is placed for loading or unloading. If the customer retains the car beyond the published free time, they will be invoiced based on the applicable charge. Average agreement demurrage is also divided into inbound and outbound. Under average agreement, the customer must have their own siding and maintain a satisfactory credit standing with the railroad. Average agreement is sort of self explanatory. When a customer receives many cars a month, the retention time is averaged through a system of debits and credits. On inbounds, when a car is received and released prior to the expiration of free time, it receives a credit. If it is not released prior to free time, it receives a debit. Each car's time is recorded and if, at the end of the month, the credits outnumber the debits, no demurrage is due. This is a mont-to-month charge and cannot be carried forward beyond that. If a car is retained beyond the limit of debits (usually an additional 48 hours), they accrue what is known as arbitraries. Arbitraries can not be offset by credits. Inbound and outbound demurrage are calculated seperately and credits for one do not offset debits from the other. Finally, there is incentive demurrage. This is another self-explanatory title. Incentive demurrage can take many forms so far as free time, placement, pull time, inclusions of holidays, daily rates, etc. are concerned. Usually, this demurrage form is applied to a certain commodity. In return for a lower line haul rate, demurrage rules are more strict. One reason this is done is to encourage the more expeditious use of a limited number of certain types of freight cars. As an example, there was once an incentive demurrage known as the Virginia Brick demurrage. It covered bricks moving in Virginia to certain designated points within the state. There were only 24 hours of free time on either end and included all weekends and holidays. The line haul rates were considerably lower which allowed the railroad to compete effectively with motor carriers. This is already a pretty long post, so next time we can chat about how demurrage is administered. It is much different now than it was just 10 years ago. All questions and comments are welcome, just jump in with any and all, Regards and have a safe day. gdc
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