Supply chain stakeholders urge House Transportation and Infrastructure Committee leaders to address rail storage charges

More than 70 trade associations sent the House Transportation and Infrastructure Committee leadership a letter asking for clarification regarding rail storage fees charged as part of through international ocean shipping. The letter was spearheaded by the National Customs Brokers & Forwarders Association of America, the National Industrial Transportation League and the National Retail Federation, and states that rail storage charges should be billed through the contracting ocean carrier and subject to the demurrage and detention invoicing requirements of the Ocean Shipping Reform Act of 2022 (OSRA22).

The joint association letter states, “This would more clearly establish that rail storage charges assessed as part of through international ocean transportation are under the operational authority of the FMC and that any unreasonable charges would be governed by the requirements of OSRA22.”

Since rail storage is not included in either the Ocean Shipping Reform Act of 2022 or the recently introduced Ocean Shipping Reform Implementation Act (H.R. 1836), it continues to unfairly plague shippers. As mentioned in the letter, “Rail storage, a form of demurrage, is charged by railroads as part of international ocean transportation at the nation’s interior rail terminals. In recent years, these demurrage charges have resulted in costs to U.S. businesses in the hundreds of millions of dollars.”

A problem arises in situations where the ocean carrier contracts to deliver goods to a U.S. inland point under a through bill of lading and purchases interior rail service to satisfy its delivery obligation. When containers are delayed at the railyard, often because of the railroad's terminal operations, rail storage charges accrue. These fees must be paid directly to the railroad by importers or their agents to gain release of the containers. The charges are often assessed even though they do not promote network efficiencies contrary to the Federal Maritime Commission (FMC) incentive principle.

The letter notes that there is a gap in authority between the Surface Transportation Board and the FMC to regulate these charges. “The lack of clear statutory authority for the FMC to address unreasonable rail storage charges assessed under ocean carrier through bills of lading is a gap that must be clarified.”

The letter concludes by asking Congress to “clarify that rail storage charges assessed under ocean bills of lading for through transportation should be billed through the contracting ocean carrier and subject to the OSRA22 demurrage and detention invoicing requirements. This would more clearly establish that rail storage charges assessed as part of through international ocean transportation are under the operational authority of the FMC and that any unreasonable charges would be governed by the requirements of OSRA22.”