Chemical shippers caution rail providers “to learn from their mistakes”

The National Association of Chemical Distributors’ (NACD) recent industry surveys on rail use and issues during 2018 and the first half of 2019 has yielded some interesting observations about transportation management. 

NACD members deliver six tons of product every six seconds. A substantial percentage of NACD members receive product via rail cars and depend on timely shipments from the railroads in order to meet the needs of their customers. 

Their surveys show that:

Rail is an important component in our industry’s transportation mix, as approximately 40% of NACD members receive product by rail.

Late deliveries and shipments were common across respondents.

Many chemical distributors reported rail capacity issues or last-mile service-related issues.

Chemical distributors are seeing rail freight rates rise.

These rate increases are occurring in spite of the fact that poor service is costing chemical distributors in terms of time and money. 

53% of respondents were assessed demurrage and/or accessorial charges, in some cases even though the carrier did not meet on-time service parameters for delivery prior to imposing the charge

71% of these cases were successfully disputed.

“The establishment and enforcement of reciprocal demurrage and a rollback of Precision Scheduled Railroading (PSR) would provide incentives for both customers and railroads to move product and rail cars more efficiently,” said Eric R. Byer, President and CEO of the National Association of Chemical Distributors.

“Under reciprocal demurrage, when the servicing railroad fails to pick up the rails cars, the shipper or receiver would charge the same demurrage rate per day and in the same time reference after constructive placement to the railroad company,” he added. 

In an interview with Logistics Management, Byer observed that recent attempts at PSR have proven “disastrous,” and freight railroads should learn from their mistakes. 

“Of course, rules are only as good as their enforcement and we continue to encourage a fully-staffed and fully-functioning U.S. Surface Transportation Board to ensure they can create and enforce policies that support growth across the entire U.S. economy,” he concluded.