Demurrage dues
Demurrage is a charge assessed by the railroad against the party loading or unloading a railroad car. Its purpose is to incent railroad shippers and receivers to release a car as quickly as possible. (Some industries use cars as cheap warehouses. Others might receive a large multi-car shipment all at once that is beyond their capability to promptly unload, perhaps because they got a good deal on the product, or it was more convenient for the producer to make one large production run.) Demurrage also reimburses the railroad for any car hire charges it must pay on the car (as explained later). Holding onto a car beyond a prescribed amount of free time will cause demurrage charges to begin to accrue.
In an earlier, more convoluted era, railroad demurrage clerks and company traffic managers could be tied up for considerable amounts of time, each arguing their interpretation of the demurrage rules. It was a point of pride among many traffic managers not to accrue any demurrage. Over the years, the application of charges has been simplified. Nevertheless, demurrage is a sore point with many customers, who believe the railroads don’t always apply it fairly.
Railroads classify customers as either “spot on arrival” or “constructive placement.” Spot on arrival means the customer has the room to accept cars when they arrive; the demurrage clock begins ticking upon placement. But if a customer routinely has more cars in town than it can accept at one time, the cars will have to be held out. When cars arrive at the designated hold point or serving yard and are ready to be delivered, the customer will receive a “constructive placement notice.” In this case, the demurrage clock begins ticking when the railroad issues the notice. Generally, when the customer orders the car in, the clock stops, then it begins again when the car is “actually placed” (spotted at the industry). For all customers, the clock stops ticking when the customer notifies the carrier it is done with the car (“release”).
