Demurrage Billing Requirements

Announcement Number: CN2020-22
Categories: General Announcements
Posted Date: June 19, 2020

To Our Customers, 

Effective June 20, 2020, the Surface Transportation Board adopted a final rule (EP 759) that requires Class I carriers to directly bill the shipper for demurrage when the shipper and warehouseman (receiver) jointly agree to that arrangement and notify the rail carrier.

With this rule, Union Pacific’s monthly demurrage calculation will not change. Additionally, Union Pacific's credit and debit system for calculating total demurrage to the warehouseman facility will not change.

If the shipper and warehouseman agree that demurrage charges should be billed to the shipper, Union Pacific will require an agreement between shipper and warehouseman, signed by both parties, which states:

  • Both parties have read and understand Union Pacific's tariff.
  • Shipper agrees to be billed for demurrage charges beginning with the next billing cycle after the agreement is signed by both parties.
  • If there is only one shipper to one warehouseman, Union Pacific will issue the bill along with all bill detail to the shipper.
  • In the case where there are multiple shippers to one warehouseman, Union Pacific will prorate the total monthly invoice by the total cars per shipper. Bill detail will only be provided to the warehouseman. If not all shippers sign the agreement, the warehouseman will receive the remaining unallocated charges for the month.
  • Union Pacific bills are due within 15 days of statement date.
  • If the agreement between the shipper and warehouseman is cancelled, the warehouseman will be billed for that shipper’s pro-rata share, effective upon cancellation.

Examples of Demurrage Billing for Multiple Shippers to One Warehouseman (Receiver)
Example 1
Total monthly demurrage amount owed to Union Pacific = $40,000. Three shippers have all signed an agreement with the warehouseman to bill the shippers for demurrage charges. The bill will be prorated based on the number of cars each shipper had in the serving yard and/or warehouseman’s facility during the month.

  • Shipper A had 10 cars (10%) during the month, and will receive a bill for 10% of the total monthly charges, or $4,000.
  • Shipper B had 30 cars (30%) during the month, and will receive a bill for 30% of the total monthly charges, or $12,000.
  • Shipper C had 60 cars (60%) during the month, and will receive a bill for 60% of the total monthly charges, or $24,000.
  • Warehouseman will not receive a bill, but will be able to access or request all supporting car detail for the month.

Example 2
Total monthly demurrage amount owed to Union Pacific = $40,000. Only one (Shipper A) out of three shippers have signed an agreement with the warehouseman to bill the shipper for demurrage charges. The bill will be prorated based on the number of cars each shipper had in the serving yard and/or warehouseman’s facility during the month.

  • Shipper A had 10 cars (10%) during the month, and will receive a bill for 10% of the total monthly charges, or $4,000.
  • Shipper B and shipper C will not receive a bill.
  • Warehouseman will receive a bill for the remainder of the monthly demurrage charges of $36,000 along with all the supporting car detail. 

If you have any questions please contact your Union Pacific representative.