Recycling industry seeks relief from excessive rail charges
Members of the Institute of Scrap Recycling Industries (ISRI), Washington, have testified before a U.S. Surface Transportation Board (STB) hearing that rail is a critical mode for transporting ferrous and nonferrous scrap metal, particularly for distances greater than 200 miles. Because many recycling facilities are served by only one major freight railroad, few options are available. According to a news release from ISRI, this means recycling companies often face poor rail service and skyrocketing transportation fees.
ISRI called on the STB to address unreasonable railroad practices related to rail car supply and storage fees.
“It’s time for the STB to evaluate the commercial fairness of railroad demurrage tariffs and practices, which in many cases are the result of delays across the broader rail network,” says ISRI President Robin Wiener.
Since major Class 1 freight railroads implemented “precision rail scheduling” at the beginning of 2019, scrap metal recycling companies have seen astronomical increases in shipping costs, ISRI says.
The system also includes unreasonable rail practices, the association says, such as reductions in available time for rail car loading, unloading and storage; service inconsistencies that precipitate demurrage and storage charges and impact facility operations (e.g., bunched cars or missed switches); the introduction of “not prepared for service” charges; and congestion charges.
According to ISRI, the association found additional examples of unfair rail practices experienced by its members. One member reported an increase in demurrage and storage charges of 669 percent in the first two months of 2019 compared with the 2018 average. Another member paid 1,000 percent more in demurrage and storage charges per month so far in 2019 compared with 2017.
To mitigate the expense, scrap facilities must employ a second crew or require employees to work overtime, driving up operating costs.
ISRI says it 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 says it also supports the STB’s collection and analysis of rail data on demurrage and accessorial charges to help ensure these fees incentivize rail network efficiencies.