Railroads should pay demurrage fees: APAS

Each day a ship waits in port empty waiting for grain, it charges a financial penalty – the demurrage fee. The Agricultural Producers Association of Saskatchewan wants the railways to pay that fee.

“We’re asking for any week where the service wasn’t 85 per cent of cars ordered, retroactive to Jan. 1, that the railways pay the demurrage,” said Ian Boxall, the association’s vice-president.

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Estimates place the demurrage fees charged between $11,000 and $13,000 per day.

“The cost gets passed down to the shipper, so if P&H [Parrish and Heimbecker] ordered a boat and it’s sitting there paying the demurrage, at some point, they’re making the money back,” Boxall said. “It might not be on the grain that’s going to fill that boat because most of that will be contracted, but at some point that’s getting passed on to the producer.”

Boxall, who farms in the RM of Connaught, said since the lack of service from the railroads has caused ships to wait in port, they should take responsibility.

“Since the railroads have apologized for the backlog of grain, that tells me they’ve taken some responsibility for it or why would they apologize? Okay, so if you’re taking responsibility for the backlog in grain, write the cheque,” he said.

“Mistakes cost money. Why should their mistake cost the producers money?”

The railroads have never actually paid demurrage fees before, even when their actions in previous years has caused ships to wait in port. In the last large grain transportation crisis, in 2013-14, prairie producers paid more than $40 million in demurrage.

As of March 29, Boxall said the two national railroads hadn’t gotten back to the association about paying the fees. The association has also sent a letter about the issue to agriculture minister Lawrence MacAulay and transport minister Marc Garneau.

“I think it would fall on their shoulders to push the railroads into this.”

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