What is OT-5 and Why is it Important to Rail Fleet Management

OT-5 is something that you may have been hearing about lately. Loading Authority OT-5 is the AAR Circular for Rules Governing Assignment of Reporting Marks and Mechanical Designations. Although the circular has been around since 1989, it has recently become more of a challenge for shippers because the rail carriers are more strictly verifying and penalizing shippers when records are not complete. We are seeing shippers being hit with shipping delays and 5 figure monthly penalty charges from the railroads.

What is Loading Authority OT-5?

Loading Authority OT-5 approval by a railroad is required before any privately marked railcar is permitted on the rail network in North America. From the railroads’ perspective, the OT-5 process is important to ensure that only safe railcars are allowed on their lines and protect operational efficiency. More railcars can mean more congestion. That is why one of the most common reasons for Loading Authority OT-5 denial is lack of storage capacity. Officially, there are only three reasons why a Loading Authority OT-5 application can be rejected:  Safety, Inadequate Storage Space, and Mechanical Factors.

The primary screens for entering information in the Loading Authority OT-5 application are:

  • Equipment number and mechanical details
  • Associated commodities
  • Loading locations
  • Storage locations
  • Controlling entity contacts

OT5 Screen

Changes to Loading Authority OT-5

Over the years, the Loading Authority OT-5 application has become more complex. For instance, in the past you only had to check a box saying that you had sufficient storage. Whereas today you have to provide specific details and contact information. You used to be able to get away with things such as shipping from a new loading location without updating the loading location. Now the railroads are verifying Loading Authority OT-5 information with each shipment. A car can only be on one application in the Loading Authority system for a carrier at a time. Whenever any of the above service information changes, the OT-5 application needs to be updated.

OT-5 Penalty Enforcement

CSX amended their 8100 tariff last July by adding a $600 charge for each private railcar tendered that does not have current Loading Authority OT-5 approval. However, we didn’t see them start enforcing the penalty until this past May. Although we have not seen this charge from other carriers, we are seeing OT-5s and shipping instructions being denied. Communication from the railroads of the denials and an explanation of the reason can be slow. CSX has stated that Loading Authority OT-5 approvals may take up to 45 days.

How To Complete OT-5

We are seeing cases in which suppliers loading customer cars are getting penalized because the customer didn’t update the Loading Authority OT-5.  So, who should complete the registration? How about for sub-leased cars? The circular states: “The controlling entity (owner or lessee) must apply for loading authority.” The entity with the best knowledge of how the cars will be loaded should complete the loading application. Some leasing companies have been handling OT-5s for their customers. However, many of them have backed away from that now that more detailed and dynamic information is required.

Save time, cost, and manage your rail more proactively by using RSI’s rail fleet management services. In addition to OT-5s, RSI can manage your railcar maintenance, lease, and compliance programs. Improve management of OT-5 to avoid excess charges with RSI Logistics.

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