Is the demurrage liability debate over? On April 11, the U.S. Surface Transportation Board (STB) announced its decision on a widely debated topic in the warehouse logistics and rail communities: demurrage liability.
Rail carriers place demurrage charges when rail cars are detained beyond the “free time” for loading/unloading. Each carrier has a unique combination of timeframes and rates making it difficult for warehouses to know when charges are incurred, as they are not directly contracted with rail carriers. However, shippers (manufacturers/product owners) are directly contracted with rail carriers and have the information needed to avoid demurrage charges.
More likely than not when demurrage charges are incurred, the warehouses logistics provider is handed the bill, not the shipper, which is at the center of the liability debate.
According to STB’s decision, “Any person receiving rail cars from a rail carrier for loading or unloading who detains the cars beyond the period of free time set forth in the governing demurrage tariff may be held liable for demurrage if the carrier has provided that person with actual notice of the demurrage tariff providing for such liability prior to the placement of the rail cars. The notice required by this section shall be in written or electronic form.”
The clarification alone stands as a victory for the IWLA Transportation Advisory Council. But questions still remain.
For example, if notice of demurrage tariff is not provided to the person responsible for unloading/loading a rail car, prior to placement, then who is the responsible party? Or, if the demurrage tariff was provided but the purpose for the loading delay is out of a warehouse’s control—will it still be held liable? This is a step in the right direction, though still seems to be a long road ahead for IWLA members to get full clarification on this issue.
What do you think?
IWLA is still gathering opinions from its counsel, lobbyist and members to decide whether this decision has positive or negative implications for the future. Once we have a complete analysis of the decision and how it might affect your warehouse we will provide members with the latest information via the monthly webinar series and/or IWLA1891 blog. In the meantime, review the Demurrage Liability Decision – April 11 2014 and let us know what you think at mail@IWLA.com or (847) 813-4699.