Surface Transportation Board: How are railroads addressing intermodal congestion?

The Surface Transportation Board is asking the Class I railroads to explain how they are addressing congestion within the international intermodal supply chain amid shippers’ reports about “sizeable” storage fees and the length of time containers are being held.

STB Chairman Marty Oberman, in letters dated Thursday to each of the Class I railroads, asked the railroads to provide certain information regarding container storage fees so that the board can assess the extent of congestion at key container terminals, as well as determine whether to lift an exemption in order to subject container cars to STB demurrage policy and rules.

The letter comes as Western U.S. rail carriers grapple with container congestion at West Coast ports. Both Union Pacific (NYSE: UNP) and BNSF (NYSE: BRK.B) took steps recently to help ocean carriers relieve the container backlogs at the ports, particularly at Los Angeles and Long Beach.

“The board has received numerous reports related to the length of time that containers are being held in rail yards, and the sizable storage fees (‘demurrage’) some customers have been required to pay in order to obtain release of containers bearing their shipments. These reports have come from shippers, both large and small, in addition to third-party logistics providers,” Oberman wrote. “I am particularly troubled about reports that Class I railroads are continuing to impose these charges even in circumstances when the receivers, as a practical matter, have no means to facilitate the release of their containers.”

To gauge the magnitude of the problem at the top 10 U.S. intermodal terminals by volume, Oberman requested the following information from the Class I railroads:

The number of “free days” allowed for container storage before demurrage fees begin to accrue.
The daily fee schedule after any free days expire.
Any increase or decrease in such demurrage fees and free time since January.
Any “fee caps” that are currently in place and how long those caps are expected to remain in place.
Whether receivers are being permitted to provide their own chassis to retrieve their containers.
A description of efforts made, if any, to reduce storage charges when a delay is not within the control of the shipper or receiver.
The average daily volume of stored containers, broken out by month from July 2020 to the most recent month for which data is available.

The board also wants to know the railroads’ policies and practices of assessing storage charges, as well as what relief is available.

Many shippers have asked the board to lift an exemption that allows intermodal containers not to be subject to demurrage policy and rules, but STB wants to make an informed decision, according to Oberman. The exemption pertains to container-on-flatcars and trailer-on-flatcars, known as COFC and TOFC.

“It is important to underscore that, at this time, the board has not initiated any actions with respect to the existing intermodal exemption. Because I recognize the significance of any such potential board action, I am requesting the above information to facilitate careful consideration of this difficult situation and to assist the board in determining whether any action may be warranted,” Oberman wrote.

“Right now, the board’s principal concerns are helping to mitigate the congestion problems at intermodal yards caused by the unprecedented economic situation, improve network fluidity, and provide relief to shippers and receivers who are not in a position to reasonably avoid onerous and potentially business-threatening storage charges,” he said.

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