Understanding Rail Demurrage Charges

How automated reporting can help you avoid demurrage charges

HOW TO USE RAILCAR TRACKING SOFTWARE TO ELIMINATE RAIL DEMURRAGE CHARGES

Demurrage and private car storage charges often seem like an unavoidable expense. Some companies don’t have a clear view of the additional costs or a clear line of responsibility internally. Others are continually frustrated by operational challenges. For many companies these charges add up to tens of thousands of dollars every month. So the question remains:

Is there a way to avoid or eliminate demurrage and storage charges?

Usually, yes. Although not always, due to operational limits and the recent reduction or elimination of credit days by some carriers. Poor railcar visibility and forecasting is often a major factor. By using railcar tracking software to automatically track railcars and generate accurate railcar pipeline reports and estimated arrival times, it is possible to minimize delays and lower or eliminate demurrage charges.

Demurrage charges often are avoidable. With the right data and visibility, several strategies exist to eliminate demurrage in the short and long term.

Enhanced Railcar Reporting

Plan and manage car flows at your facilities

Charges for detained equipment means railcars are not being cycled through in a timely manner. There can be a variety of reasons including:  spikes in inbound traffic volume, operational delays in the plant, limited yard size and storage capacity, and the bunching of car deliveries by carriers. Regardless of the causes, having pipeline visibility is the first step in controlling car flows. You need to be able to see what is coming in the days and weeks ahead. You need to know about cars inside your gate and at storage-in-transit yards. How long they’ve been there, car owner / fleet, contents, and status. With this information logistics can coordinate with other departments (operations, procurement, and sales), and supply chain partners.

eliminate demurrage

Enhanced reporting and automated alerts change the fleet management landscape by providing elements such as:

Automated demurrage and detention reporting with cost calculations

Railcar tracking & pipeline reporting with dynamic ETAs

Automated & flexible reporting pushed to the various stakeholders

Car inventory reporting and more complete information on inbound loads

The right railcar tracking software can monitor locations, forecast accurate arrival times, and provide alerts on held cars. By placing movements, reports, and statuses in one place, fleet managers can anticipate, avoid, and correct causes of demurrage charges. With the data at your fingertips, demurrage charges are no longer a mystery.

Easiest way to see if our technology can help you is to give it a try. Risk free.

Auditing Demurrage Charges

Maintaining accurate records and demurrage calculations

demurrage

You may be overpaying demurrage charges, but you can’t know it unless you calculate it yourself. Inaccuracies in demurrage billing can easily occur, and the party who caused the demurrage charges may not be the party who is billed.

RSINet uses demurrage calculations with railcar tracking to show how much demurrage is owed compared to how much was billed. You are able to see in real time the location of your railcars compared to your loading and unloading schedule, as well as an accurate demurrage charge report via the rail carrier’s demurrage rates.

The right railcar tracking software allows for:

Calculating actual demurrage based on location tracking

Forecasting demurrage charges for accurate billing

Auditing invoices to eliminate overcharging

Managing railroad service errors such as delayed cars and switching failures to bill the appropriate party

With demurrage charge tracking and auditing software, you can cross-reference demurrage charges with actual demurrage incurred to ensure you are not overpaying. Car status and movement reports will also show when the railroad or another party is responsible for the delays and the demurrage. If an error by the railroad or another event caused extra delays, you should not be responsible for paying demurrage, and you can receive a credit.

RSInet is railcar tracking software designed by railroad logistics professionals to help streamline processes and cut costs.

OPTIMAL FLEET MANAGEMENT AND UTILIZATION

Maximizing fleet utilization and reducing congestion

Many companies acquire new railcars in response to increased demand or slow repair times, which causes more track congestion, longer detention times, and increased demurrage. More empty cars sitting on rail lines when demand changes makes it harder to load and unload on time, exacerbating demurrage problems on busy lines and stations.

Using railcar tracking software to forecast demand, transit times and repair times, you can run a lean fleet and utilize existing cars more efficiently. The whiplash effect in railcar construction and demurrage resulting from congestion is eliminated.

Other benefits include:

Accurate demand forecasting to show when and where equipment is needed

Maximizing utilization to keep railcars moving efficiently

Organizing a lean fleet to remove empty cars and equipment from tracks

Reducing congestion for better flow, less delays, and less demurrage charges throughout

RSInet is railcar tracking software designed by railroad logistics professionals to help streamline processes and cut costs.

USING DATA-DRIVEN SOLUTIONS

Analyzing movements and specifying actions to decrease demurrage charges long-term

With location, movement, status, billing and utilization data available, you can identify opportunities for improvement and develop optimal solutions. This allows you to not only eliminate problems currently causing your demurrage, but to organize solutions to permanently eliminate demurrage charges from your books.

Once you have the data to reveal a problem, you can develop a solution. The data collected may reveal consistent, recurring problems in your billing systems or supply chain management, and it will show where demurrage charges repeatedly come up.

Based on your railcar tracking, billing, and auditing data, the right railcar tracking software can give you key solutions to reduce demurrage long-term, including:

Eliminating overpayments: contracts may be renegotiated with rail carriers or other parties that consistently deliver incorrect demurrage charges.

Coordinating with suppliers: tracking shipment volume and increasing utilization to improve flow.

Scheduling railcar release as early as possible around the start of chargeable days.

Optimal utilization: reducing fleet size and improving fleet balancing across locations to remove vacant or unused cars.

Leasing cars where appropriate to avoid demurrage charges on railroad controlled cars.

Using Spot-On-Arrival instructions to improve flow.

Leasing or expanding new tracks in problem areas to increase storage capacity and efficiency

Renegotiating contracts to reduce demurrage charges overall

RSInet is railcar tracking software designed by railroad logistics professionals to help streamline processes and cut costs.

What our customers have to say...

RSI’s professionalism and expertise has earned them the lead role in managing our rail transportation program. RSI directly supports our corporate logistics, customer service, and plant operations.

Chis Zona, Transportation and International Manager

We’ve had the pleasure of utilizing RSI’s products and services for nearly 15 years. They’ve taken all of the hassle out of managing our rail transportation and delivered significant savings.

John Randle, President

RSI’s terminal services have enabled us to reach new markets and grow our business. Their great support and customer service gives us a competitive edge with our customers.

Paul Brandimarto, Manager Corporate Transportation

We’ve been doing rail for 30 years, we would love to chat with you about your business and any of your current challenges.

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