recently, the American Western Railway (UP) said that due to the sharp decline in the number of ports, Southern California has piled up fewer containers. The cap on demurrage fees for seven inland terminals will be removed from November 28. The decision to lift the cap comes more than a year after UP adjusted its demurrage policy.
after shipping containers were stuck at the Global IV terminal in Chicago in mid -2021 and the U.S. supply chain was congested, Union Pacific Railroad began to limit demurrage fees. Demurrage is charged after the goods are stranded beyond a certain point in time. The port believes that the threat of demurrage fees will help improve congestion; shippers believe that shippers are not the main cause of congestion and should not bear additional costs.
The rail demurrage cap, which refers primarily to storage fees, will be eliminated in Council Bluffs (Iowa), Dallas, Denver, Houston, Memphis, Salt Lake City and St. Louis. The cap was imposed because shippers slapped more than $10,000 in fines for containers that were inaccessible because they were buried deep in stacks.
for now, the Chicago, El Paso (Santa Teresa) and Kansas City charges will continue, likely because containers have been stacked at UP's Global IV terminal and on the Kansas City ramp. UP did not rule out lifting the demurrage cap in the remaining three cities next month if conditions permit.
There has been no significant improvement in the rapid movement of containers from the terminal to the ports of Los Angeles or Long Beach by train, is understood. According to the Pacific Merchant Shipping Association (PMSA), containers spent an average of only 3.5 days at the terminal in October before trucks left, compared with 14.2 days for trains. According to PMSA, only 10.9 percent of truck containers stayed at the terminals for more than five days last month, while 63.2 percent of train-bound containers sat idle for more than five days.
UP said in a statement: "Union Pacific maintains a 14-day storage cap at several intermodal terminals in 2022 as we and our customers work together to address supply chain challenges. "We are seeing a reduction in the backlog at West Coast ports and inland terminals and expect this to continue. In view of the smoother activity, we are removing the cap and encouraging shippers to move their containers in a timely manner.
last summer, heavy imports from West Coast ports overwhelmed rail yards. According to the carrier, due to warehouse restrictions, lack of truck drivers and shortage of resources such as pallets, shippers stranded their goods in the railway yard, thus greatly reducing the speed of railway transit.
UP said that shippers' container stay at the yard increased by 40%, and the time required to return containers in 2021 increased by 20%, resulting in the detention fee charged in 2021 being higher than before.
Forwardernet.com