Transportation Regulatory Priorities

T&I Leg Large (3)

Contact Information:
Katy Hartnett
Director, Infrastructure & Transportation

khartnett@cement.org


Background:

The cement industry relies on the railroads to meet their shipping requirements and often have no practical, feasible modal alternatives to railroad service for their shipment needs. Since 1995, shipments of hydraulic cement have been exempted from Surface Transportation Board (Board) regulation denying cement shippers the same legal remedies and protections available to other commodities facing unfair and unreasonable rail shipping rates and policies. The Board can exempt commodities from its oversight when there are adequate intermodal alternatives for the shipment of the product. When the Board made this decision in 1995, they found great competition in the transportation of hydraulic cement, and railroads faced sufficient intra- and intermodal competition.

Over the past 25 years, the market conditions for the shipment of cement have changed. Specifically, there has been a significant reduction in transportation options available to cement manufacturers, reduced railroad competition, increased shipping rates, and increased market power and abuses by the railroads. As a result of these changes, the cement industry has been seeking for this exemption to be lifted for the past 10 years.

In 2016, the Board proposed reinstating oversight of the shipments of hydraulic cement and several other commodities. The Board has been moving slowly on making a final decision on their proposal. Most recently, in September 2020, the Board proposed a new economic model for considering revocation of exemptions. The cement industry believes the proposed model is unnecessary, technically, and legally flawed. Instead, the cement recommends the Board take swift action on their 2016 revocation proposal.

In theory, demurrage is a charge intended to discourage undue car detention, thereby encouraging the efficient use of rail cars in the rail network, while also compensating Class I railroads for the expense incurred when rail cars are unduly detained by shippers. Over the past couple of years, the cement industry has experienced increased demurrage billing because of greater use of precision railroading by rail carriers, which has led to reductions in service frequency and avoidable delays to rail cars at shipping facilities. The cement industry supports continued action by the Board to ensure the reasonableness of demurrage fees on the part of railroads.

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