Recyclers seek relief from PSR charges

Recyclers are pushing federal regulators for relief from demurrage fees associated with precision scheduled railroading.

Lobbyists and representatives from recycling companies want the Surface Transportation Board to require railroads to revisit PSR-related practices that have increased transportation costs for shippers.

Seeking to streamline operations, the nation’s largest railroads are giving shippers less time to load and release cars. Shippers must pay demurrage charges when they don’t load and release cars within the time provided, which is frequently 24 hours, even if a railcar is delivered when a business is closed.

Many of the changes were implemented by Class 1 railroads as of Jan. 1. Norfolk Southern rolled out its TOP21 precision scheduled railroading operating plan during the first week of July.   

Though Norfolk Southern has made some changes that are favorable to shippers, such as eliminating a $500 handling charge that was applied to demurrage disputes that the railroad hadn’t received by the 5th of the following month, recyclers still face unfair charges, according to a letter regarding changes to NS demurrage tariffs that the Institute for Scrap Recycling Industries sent to the STB on July 12.

Recyclers need widespread relief from the demurrage practices that ISRI members and other railroad customers have brought to the attention of STB members, ISRI stated.

“The concerns with demurrage practices are widespread, impacting customers of all sizes and across multiple industries,” wrote Billy Johnson, ISRI’s chief lobbyist. “Thus, the incremental changes proposed by a single Class I railroad are not sufficient to address this systemic issue.”

Seeking help from the STB

Scrap recycling companies representing more than 170 facilities nationwide have asked the STB to intervene “as increased fees and unreliability harm their ability to conduct business along the US rails,” Argus Media reported in an article on how rising rail rates, demurrage burden US scrap firms. “Topping the list of concerns was increased demurrage and the lack of recourse against railroads, especially when fees are caused by railway events like bunched cars and missed switches. Shippers said these events are now more frequent as PSR is implemented,” according to the Argus Media article. Argus Media cited the following examples of increased demurrage.

“Schnitzer Steel attributes more than $500,000 in outstanding demurrage bills to a reduction in free days for private cars and bunching on the railway.

Rocky Mountain Recycling said it owed $58,000 in demurrage within the first four weeks of the year for its sole Colorado scrap yard. The company incurred just $80,000 in demurrage for all of 2018 and as little as $4,500 a year as recently as 2014.

Tucson Iron & Metal said it is incurring demurrage for the first time since 2015 after its Class I railroad reduced service to just two days per week. Tuscon said it cannot absorb the increased costs as a small business.”

However, recyclers lack recourse against railroads because ferrous scrap is exempt from regulatory oversight such as that of the STB. ISRI has sought to have that exemption revoked so that recyclers could pursue “remedies in situations where rail customers experience poor rail service or excessive fees,” according to an ISRI summary on how the scrap industry has taken on the railroads.

In May, ISRI members testified before an STB hearing that rail is a critical mode for transporting ferrous and nonferrous scrap metal, particularly for distances greater than 200 miles. 

“Since many recycling facilities are served by only one major freight railroad, there are rarely alternative modes of transportation—which means scrap metal and other recycling companies are too often suffering poor rail service and seeing skyrocketing fees,” according to an ISRI press release on the recycling industry seeking relief from excessive rail charges at the STB.

The association stated that: 

“ISRI is asking the STB to apply the following principles in its evaluation of reasonableness of railroad demurrage practices: 

* Demurrage practices must serve their underlying purpose of incentivizing an efficient rail network and must not be designed to generate additional revenue for the railroads; 
* Railroad customers should not be penalized for railroad service failures; and 
* Railroad customers should be given sufficient notice to allow for adjustment of their operations.    

ISRI also supports the STB’s collection and analysis of rail data on demurrage and accessorial charges in order to help ensure these fees properly and fairly incentivize rail network efficiencies, rather than simply drive profits.”

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