Q:
We are a grain shipper and have a large export elevator in the Gulf coast area. The elevator is a 100-car train receiver. We can unload a 100-car train in 12-16 hours.

We have a grain train program with a major railroad each fall during the harvest period (roughly September-March), as do other export elevators in the area.

For the last couple of years during periods of heavy demand complicated by rough weather, the railroad has constructively placed trains destined to the elevator at points in other states as far away as the upper Midwest.

We have notified them that we will not accept placement of these cars as some have been as much as 700-800 miles away. Their response is that this is the result of grain congestion in the Gulf area on their line (not necessarily ours), and that we could not take the trains as we were unloading an earlier train.

We have no control of what they choose to do for others and no control of their operations. Our response has been that although it's true that we cannot take a train while unloading a previously arrived train, they could not place the train as it is still hundreds of miles away.

Well, the demurrage bill shows up and we fight about it. Fortunately for us we keep good records and have been able to get most of the charges removed, but it is always a struggle.

My question to you is, can the railroad constructively place our trains hundreds of miles away due to congestion on their line?

A:
Give the carrier points for creativity.

But don't give them any dollars for demurrage.

Joe Cavinato's Transportation Logistics Dictionary (now out of print) says "constructive placement of cars" occurs "when a carrier cannot place cars on an industrial or private track due to conditions attributable to consignee or consignor, and it is forced to place the cars elsewhere," and adds that "the cars so placed are subject to the usual demurrage rules and charges."

Now, Cavinato doesn't go into detail about how far away that "elsewhere" may be, nor do any other sources I've found; and it's reasonable to cut the railroad a little slack if there's nowhere for it to put the cars nearby.

But 700-800 miles away across not just one but several state lines is more than "a little slack," it's off the charts. Based on the details you gave me some of these "placements" are within hailing distance of where the grain was harvested, and certainly a lot closer to there than to you.

As Cavinato says, a carrier's inability to make delivery (actual placement) must be "due to conditions attributable to consignee or consignor" before constructive placement applies.

Here, though, it sounds like the railroad's main problem is congestion on its own tracks or those of connecting carriers. Even its response to you suggests as much.

In addition, let's say your busy elevator is full up with a fresh arrival of cars awaiting unloading. You say you can turn those cars around within 16 hours max.

Well, it's going to take the carrier at least that long to get the train down those 700-800 miles to your doorstep. So why can't it just keep on chugging along?

(Yes, I'm oversimplifying; you might have other batches of cars waiting closer at hand that arrived first. But my point is, some nearby space is going to be freed up in the time it takes for the new trainload to get there, and that's when - and where - constructive placement should be made if actual placement isn't possible.)

I've noticed lately that carriers of all modes are getting more and more aggressive about assessing "incidental" charges for all sorts of things. I mean, consider the airlines charging passengers extra to check bags, snuggle up with blankets and pillows, etc.

Other modes at least have the pressures of skyrocketing fuel prices and tough market competition to cope with. Railroads, by contrast, are the least fuel-intensive sector of the transportation industry, and their modal competition has been all but eliminated by mergers and consolidations.

So what's their excuse? I think it's more a case of "because we can" (so long as shippers are compliant) than any objective cause, coupled with the almost total deregulation of both the law and its administration and application.

Railroads are still legally prohibited from "unreasonable practices." But while that may help you case by case, I doubt if you can use it to set any stated limitation on how far away a carrier may constructively place your cars.

One possibility occurs to me. You say you have a "program" with the railroad, by which I understand you to mean some sort of contractual agreement. Negotiate with the railroad to spell out just when and where and under what circumstances cars may be constructively placed.

Other than that, though, all I can tell you is to keep on "struggling" to get these charges waived in the circumstances you describe. It's a hassle, I know, but it's better than paying.

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, (843) 559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the 536-page compiled edition of past Q&A columns, published in 2001, at $80 plus shipping.